Splitting the profit? – Help

Do both partners agree that the split should be calculated on both initial investment and the additional money A spent?

Simon Macks
Residential and Commercial Finance Broker
***NODOC @ 7.15% to 70% LVR***
[email protected]
0425 228 985

Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.

It seems to me that there is a $40K return of equity plus a $260K return of profit.

If the agreement was to share it equally then it seems that $150K each is the way to go.

Yet you have paid in another $70K. Some of the time you lived there so enjoyed rent free accom.

Perhaps if you calculate what it would have been had you also received rent in that period you lived there you might have a more equitable idea of a split.

I think the issue here is agreement and possibly communication. Does the other party expect $150K or is he willing to take a lesser share to recognise your additional input?

Remember there are two perceptions to every conflict. Try and see the other point of view as well – remember you did get to live there for a few years. Who claimed tax deductions? Did either party get to use the security to borrow against for other properties? etc etc

This certainly illustrates the importance of having a detailed agreement in place before one starts a joint venture.

Perhaps you both need to agree to accept a third parties opinion of what is equitable? Mediation?

Be very careful that any disagreement doesn’t cost you a friendship as well as years of prtracted fighting in or out of the courts. As well as any negativity that you end up having in your life as a result of ill will.

All the best,

Simon Macks
Residential and Commercial Finance Broker
***NODOC @ 7.15% to 70% LVR***
[email protected]
0425 228 985

Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.

hi JJ&Jo
having read the posts you will already know the told you so bit so i won’t down that path to far except to say that all these types of jv partnerships must be drawn up by a solicitor I in the middle of one this week and the company that does mine michael talks to me about it and his partner in the firm talks to mario so we both now the exact position of each person and things like you question don’t happen.
Having said that mu idea would be to value the rental period that the person lived in the house.work out all cost to each party remove that from the profit and then split the profit by 50%.
now comes the hard part also having read your post I would emagine that there was no trust or company structure in place because if there was or is then talk to your accountant because depending on your respective tax brackets you may wish to change that split for tax reasons.
now for my ideas
whoever is in the highest tax Bracket gets the majority of the losses and the person who is in the lowest gets the profit you get to as close as 50/50 as possible file any huge profit loss off to learning and ask the person to go into another deal but this time make sure you setit up right at the start.
you have the most to lose ( why the person who puts out the most money has the most to lose)
try not to make enemys you will find heaps along the road of investing no need to add to them, if you run out I can send you some of mine.

one for outside the square
draw the equity out of the property to the tune of the rental split that and go off investing on your separate ways, stay friends and keep the property.
I’d go for the above.

here to help

JJ &Jo,

Congrats on a great profit.

The are tax issues that should be considered too.

Who claimed the tax deductions?

What is the CG?

Recommend you both see an accountant.

hrm