Profit Sharing between Partners and Tax Deductions

[Giang Nguyen]

Hi all!

I recently bought a duplex under my name that needs to be rehabbed. My boyfriend is helping me out with being the GC and also doing some of the rehab himself. I'm financing the deal, helping out with the design, some GC, but I won't actually be doing the work. Here are my questions:

1. If I want to split profit (rent, extra cash from refinancing, etc.), would an LLC be the only/best way to go? I bought and will be rehabbing the property with cash, and would like to refinance the property afterward. It seems like being in an LLC would increase my interest rate even if I guarantee the loan under my name.

2. If we're not doing an LLC, and I'm just getting an umbrella policy for liability, how can I split profit that would maximize deductions? Do I just file on my tax that I pay him a certain amount and consider that an expense? And he will file that as "income" and have his own deductions?

Any thoughts or ideas are welcomed and appreciated!