Whats the best way to structure a JV with the person selling the home you just bought?

[vargam3]

Hello Everyone,



I was wondering if there was a way in which a person can use some of the equity they just gained by selling you a home to then use to invest in a JV Deal with you.



For example I am purchasing a home off of someone and they will be making a capital gain of $150,000, if they were interested in investing say $50,000 of that profit into a future JV deal with me is that something that can be done??



If so how would it work? Would the seller receiving the capital gain just leave that $50,000 in the trust account with there lawyer or send it to my lawyers trust account after our JV agreement was completed?



Or would that individual have to have all the funds deposited into there account first and then turn around and send it back to my lawyers trust account to be used as investment capital?



I have heard of people using this strategy and it sounds like a great idea to present a JV opportunity to a person that just received a large sum of capital. However I am just not sure what the steps are to do this so it is legal and there are no issues with CRA or other things i may have overlooked?



Thanks alot for any insight you can provide.

 

[Thomas Beyer]

I do not see a difference here at all to a classic JV, with the exception that the $s from sale do not materialize, but as you said, stay in a lawyers trust account while the property is sold to the new JV entity (a corporation ? a jointly held common ownership ? a trust ?)



Using your example, the house is sold for $400,000 to the JV with a new $300,000 mortgage. $100,000 is thus the equity provided by the seller, and perhaps $50,000 paid to her/him from the sale (assuming the mortgage was perhaps $250,000 before).