Venture Capital Investment Agreements - How To Grow Your Business

Real Estate Investment Fee Deduction?

I paid a 2% origination fee to a real estate investment company under a joint venture/consultative services agreement to find discounted pre construction property in which they bulk buy up to 30% of developers units at a 15% discount to initial retail price and sell to investors that would result in a built in initial high equity position, which could then be sold back on the market at a higher price to turn a profit when construction is completed in which both the real estate company and myself split the profits 70%/30%. The joint venture partnership agreement stipulates that at completion if subsequent buyer is not found, real estate company will come in and pay 6 months of mortgage costs. This 2% is paid when purchasing the property. Is this 2% fee deductible in the year it is paid as a miscellaneous expense or have to be added to cost basis to calculate capital gains when property is sold at completion?

Call and listen only to your CPA or down the road you face the IRS?

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This entry was posted on Wednesday, July 27th, 2011 at 11:03 am and is filed under Venture Capital. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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