LLC Personal Loan Tax Treatment (Interest vs Dividends)

[Jason Braud]

Have a tax question. Starting a new real estate LLC where one partner brings majority of upfront capital to the venture for down payment on first property. In a bid to keep the ownership in the LLC at 50/50, would like to structure some of the down payment funds contributed as a loan to the LLC. The only tricky part I see with this is the IRS potentially treating interest payments on the loan as dividends due to the ratio of the personal loan value to total equity in the LLC.

Is this something to worry about? Or would this not be a problem since the LLC would own the property, with the equity in the property and additional capital contributions outweighing the value of the personal loan?

Example

Sales Price: $400,000

Down Payment: $100k

Partner 1 Capital Contribution: $15k

Partner 2 Capital Contribution: $15k

Partner 2 Personal Loan: $80k

*LLC Now has a $400k property with $100k equity, $10k in bank account, $80k liability on personal loan, $300k liability on commercial loan.