Tax on Profits

[Lydia Woods]

Hi Everyone!

Me and a partner doing a fix and flip together, we established our roles and agreement. Since this our first one, before starting a LLC together we want to complete this first one to see how things go before going any further.

My question is if one person name is going on the mortgage loan but we both will be on the title. When we sell it, and receive our seperate profits. Will we individual have to pay taxes on the entire profit or our seperate profits?

Thank You!

[Jeff Nash]

You pay taxes on your proportionate share of net profit as you agreed upon per any operating agreement as mentioned.  You basically have a partnership and might want to consult a good business and tax planning professional and attorney to avoid having to possibly pay more in taxes than is necessary.  With fix and flips that are successful you have several opportunities depending on the facts and circumstances.