JV set up?

Hi all,

I have a question if we could set up a JV in the most simplest way.

Let’s say My wife and I have a professional company called A Ltd. and the company owns 100% of B Ltd. which holds couple RE. If my BIL wants to come in 50% of all the assets and we’re willing to leave the mortgages the same with our personal guaranteed, could we just create a brand new C Ltd. which BIL owns 50% and we own 50% of the same shares class, then have A Ltd. sell the 100% ownership of B Ltd. to C Ltd.?

Thanks,


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Real estate structure needs to be below A for sure.

Structure for LP described above needs to consider LP and GP, usually you have separate vehicles for the LP and GP. You will probably want a separate GP entity if you are the controlling owner and have some form of waterfall / promote structure. My understanding from what you have written is that your investor could come into the B level.

My understanding is Khoa ownes 100% of A (professional company). "A" currently has 100% ownership of B real estate holding company. I would think you can create C at the same level as A to invest into B. At B, there are only LP interests. You will need to create a separate GP entity.

B can issue units or whatever your legal decides to A and C.

Pretty much any combination is possible, but it all sounds complicated and unnecessary to me But that’s without knowing what the thought behind it is.
Why all this? Is your real estate already purchased through you LTD and is the company holding the mortgage?
Or are the couple of RE investments currently in your own name but you want to sell of an interest to BIL (50%) and move all into a new LTD?

3 companies is 3 tax filings and 3 times the cost. And you will definitely have to inform yourself about taxation within a corporation or in personal, I would really look into it all before you do all that work.
My guess is that for a a couple of RE investment there is no benefit doing all this.

Buy small properties personally. There is no tax benefit in owning rental properties in a corporation. Only if you develop, or flip properties, or have very large assets with large commercial mortgages should they be in a corporation as a small business. Small biz profits from “passive” investments now capped at $50,000 a year for beneficial small biz tax rate. Rental properties are classified “passive” investments.

The shareholders of said firm can be multiple entities with different share classes ie dividends or not. LPs an option too, of course. Needs more detail re other income, or age, or kids or not, to structure it properly. Send me a message with details if you like, or don’t like to share these intimate details here.

Keep in mind set up cost and annual filing and accounting costs. As such not worth it if assets are below $1M in each firm, as a rule of thumb.

Thanks for all the inputs folks.