Can somebody with a finance head please help me with the following scenario in regards to structuring the purchase of an investment property by two people. Would the following calculation be the correct way to structure the arrangement to ensure fairness?
A & B buy a property in partnership.
A puts down 20% of the purchase price out of their own cash and B puts down Nil.
A & B obtain a joint loan for the remaining mortgage.
A & B then pay the mortgage 50/50.
A pays 60% of the other costs and receives 60% of the income.
B pays 40% of the other costs and receives 40% of the income.
The property is sold in a few years.
During the term of the loan A retains a 60% share of equity on the property and B has 40% equity.
After the remaining mortgage is paid out the profit is split 60% to A and 40% to B.
Q. Is this the correct way to structure the arrangement? or have I got it totally wrong?
thanks
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