Tax question for Joint Venture Rehab for SFR

[Chris Cabanilla]

I’m in a situation where my in-laws and I have agreed to split profits upon the sale of their house in Orange County, California. I would put in the rehab money to renovate their house. And upon the sale of the house they would keep $400K, and I would get the remaining profits.

which would be better in terms of saving money from tax purposes?

1) have them quitclaim the deed to me so I am added to the title and have escrow disburse the funds according to our instructions? Or

2) upon the sale of the house, just have them write a personal check or wire me the money?

Thanks!

[Basit Siddiqi]

@Chris Cabanilla

Is this property their personal residence? They may be eligible to exclude a portion or all of their gain on the sale of the house if yes. However, you being added to the picture does make things more complicated and likely less tax favorable.