Hey guys, sorry for long first post.
My wife makes most of our money, she makes about 300k and I make around 45. We recently used our HELOC to buy into partnership to buy and renovate a building. Its going well, the interest is a write off and the building is being renovated aggressively so it running at a loss currently. All in my wife's name.
We also recently loaned the building 150k for a further renovation. The building is paying us interest monthly at a 4% spread on the heloc interest (heloc at 7.2 loan is at 11.2). It interest changes we still make the 4%. It occurred to me that I could utilize this arrangement to make 11.2% on any cash we had on hand. For example, take 10k in cash, pay off 10k of the HELOC now we are paying 7.2% on 140k but receiving 11.2% of 150k. A quick spreadsheet and playing around shows that there is a relatively small net gain, since we lose the extra interest as a write off and we pay income tax of the profit at my wife's top tax bracket.
My question is, can we structure this so that I am lending/investing the cash with my wife, and she pays me the profit, it becomes income for me and an expense for her?
Thank you in advance
Phad
My wife makes most of our money, she makes about 300k and I make around 45. We recently used our HELOC to buy into partnership to buy and renovate a building. Its going well, the interest is a write off and the building is being renovated aggressively so it running at a loss currently. All in my wife's name.
We also recently loaned the building 150k for a further renovation. The building is paying us interest monthly at a 4% spread on the heloc interest (heloc at 7.2 loan is at 11.2). It interest changes we still make the 4%. It occurred to me that I could utilize this arrangement to make 11.2% on any cash we had on hand. For example, take 10k in cash, pay off 10k of the HELOC now we are paying 7.2% on 140k but receiving 11.2% of 150k. A quick spreadsheet and playing around shows that there is a relatively small net gain, since we lose the extra interest as a write off and we pay income tax of the profit at my wife's top tax bracket.
My question is, can we structure this so that I am lending/investing the cash with my wife, and she pays me the profit, it becomes income for me and an expense for her?
Thank you in advance
Phad