Legal Question in Real Estate Law in Arizona

Re: Joint Venture/Partnership/Taxes...

I will add to the previous answer. If you have income or capital gain, you have to pay taxes. Tax planning can minimize or defer taxes.

You need a business plan that includes written contracts for the joint venture or partnership, legal organization to protect you from liability, perhaps a marital agreement if you plan to marry, and tax planning. We are in the East Valley and service clients all over Arizona and the West. 480.835.1500. We offer free initial in-person consultations.

Good luck.

James D. Jenkins

Re: Joint Venture/Partnership/Taxes...

You did not say if the proposed purchase and remodel is going to be done by your LLC, but in the first instance, I will assume that it is. Also, you have not described what your deal is with him, what is he doing in addition to providing the down payment, if anything? Who is doing the remodeling and how is it to be done? Who is marketing the property and who sets the sale price?

You as the managing member of your LLC must have a contract with your boyfriend which sets forth what each party's duties and obligations are in this joint venture, who receives what benefit during and after the completion of the remodel and who receives what benefit after the property is sold. What happens if the property does not sell at the price anticipated? What if the house does not sell in 6 months after it is remodeled? Who makes the decisions, which decisions, all the decisions?

This agreement is essential from all points of view, including the determination of what tax liabilities arise out of the sale of the property.

If you intend to marry, then you should have a pre-nuptial agreement, which states and determines what your agreements are regarding a number of subjects, including what income, property and assets are your separate property and which assets and income do you intend to own jointly and what happens if the marriage fails, or if one of you becomes incapacitated, or if one of you should pass away. The pre-nuptial agreement is most important, and you will determine by agreement what would happen if you were to give or he was to buy an interest in your LLC, which is now your separate property.

No matter what you plan to do, do not go forward without counsel first with a competent attorney and 2) a written agreeement(s) so that it is clear and precise what you agreed upon, who was to do what, who was to get what, and what would happen if the project fails, or if there are losses, or if the project is very profitable or what would happen if you agreed to disagree and want to terminate the joint venture.