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Richard, Tax Attorney
Category: Tax
Satisfied Customers: 55608
Experience:  29 years of experience as a tax, real estate, and business attorney.
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I have never purchased an apartment with a friend and I wanted

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I have never purchased an apartment with a friend and I wanted to know is it best for my friend and I to set up an LLC to make the purchase or just have both our names on the deed? If we set up an LLC would that mean we would have a whole separate tax liability and that neither of us would have to report this property or rent associated with it on our personal tax return? Also, what if we don't split our contribution 50-50...if it's 60-40, where does that get taken into consideration?

Good afternoon. Yes, it would be advisable to own this in a will prevent you from exposing your other assets to liability if there is a problem with the property. This LLC will prepare it's own tax return...Form 1065...and then those items will flow through to your returns via a K-1. You can allocate ownership percentage interests, contributions, allocations, buy-sell agreements, management, and any other agreements you make in the operating agreement for the LLC. That's where the 60/40 ratio rather than the 50/50 ratio would be addressed and then on the tax returns when prepared.



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