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Updated almost 3 years ago,
Tax Implications for Partnership
I am interested in forming a partnership for a future multi-family buy and hold. In exchange for 20% equity, I would locate the deal, perform minor maintenance and repairs to get property ready, and manage the property while the other partners will be silent and collect passive income.
After speaking to my accountant, they shared that this would create a taxable event since I did not contribute capital. He shared there are a few ways around this including collecting equity at the end of the partnership when you sell it.
I am curious, what creative ways have you seen to structure the deal where one partner will be actively managing and others contribute capital that does not adversely effect the managers tax liability the first year. Would taking out a personal loan and contributing equity to the llc be a way to go about this?
Thank you.