Renovating a historic home is hard enough without taking on more partners. Dave thinks that Dan and his wife may lose their friends in the process.
ANSWER: There may be some local tax advantages, but there aren’t any federal tax advantages for purchasing a historic home.
You should never do a partnership – especially when buying a home. Renovating a historic home is definitely rewarding, but it’s hard enough taking it on by yourself. You don’t need another couple in the mix.
If you’re determined to have a partnership, then you need to set up an LLC – a limited liability company. That will insure that each of you own a portion of the LLC. It also means that if someone wants to sue you, they can only take the property – they can’t come after your personal residence or assets.
However, with an LLC if something happens to your partners, then you are still liable for all the debt by yourself. You have to buy life insurance and disability on the parties involved in the LLC as well as develop a partnership agreement to cover all the contingency issues. It’s a hassle, it’s a huge risk and I would not renovate a historic home with a business partner.