I have an investor that wants to invest in my next MHP project. They have asked how can they get some tax breaks in lending the money for the park. I have used them before but we structured the deal as more of a bank loan and there is no tax benefit for them. Any help would be greatly appreciated.
Thank You in advance
Jordan
You could consider creating a limited partnership with them and have them as the limited partner and you as the general partner. This would give them a percentage of ownership in the park and thus they would get some tax benefits. You would still have the control and they could be silent on park operations. Talk to an attorney to get it set correctly.
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As BruceM wrote, talk to a competent tax attorney.
If your investor could be given some responsibility so that they were an active investor instead of a passive investor, experience tells me everything changes for them.
This is what I do, but structure is everything.
I would lend the money from a tax-advantaged account like a Roth IRA.
Or they can put up the money as option consideration and not be in the chain of title, but the profits upon resale would be at capital gains rates.
Or they may create a hybrid by lending some and optioning some.
Or . .
As IBM used to say “THIMK”
Mike
Make sure you chat with a competent CPA who is experienced in real estate taxes. It can be done, and there are lots of options. I’d google to find some relevant information first, so your CPA consultations are well informed. But this is a pretty common arrangement and should not be a big deal.