Rental Homes

[Monk-N-Dunk]

Any of you in Rental homes; specially with a partner? I have a tax question that I couldn't find an answer to.

[widespreadsooie]

What's your question?

You will need to allocate your income and expenses appropriately if your invested with a one or more partners.

[hog.goblin]

Any of you in Rental homes; specially with a partner? I have a tax question that I couldn't find an answer to.

What's the question?

[Monk-N-Dunk]

To get standard 30 year financing, my partner and I had to stay away from a llc. Instead, we signed a joint partnership. We will put the first house in my name, the second on his, third in my name, etc. We will do this until we reach the max in a personal name which is 5. After that, we would have to create a llc. How do we approach taxes if the first home is in my name and not his? It sounds like I'd benefit from depreciation or losses but he wouldn't. Thoughts?

[widespreadsooie]

I would wait for hog.goblin's response on this one but I believe you can share the income and deductions however you would like regardless of who's personal name assumes the financing on each home. 

[RivercrestHog]

To get standard 30 year financing, my partner and I had to stay away from a llc. Instead, we signed a joint partnership. We will put the first house in my name, the second on his, third in my name, etc. We will do this until we reach the max in a personal name which is 5. After that, we would have to create a llc. How do we approach taxes if the first home is in my name and not his? It sounds like I'd benefit from depreciation or losses but he wouldn't. Thoughts?

I don't know the answer to your question, but if you're gonna get into the rental game, then I would recommend finding a good CPA with real estate experience. He'll pay for himself.

I'd also recommend checking out biggerpockets.com. It's a large real estate community that has lots of good info.

[hog.goblin]

To get standard 30 year financing, my partner and I had to stay away from a llc. Instead, we signed a joint partnership. We will put the first house in my name, the second on his, third in my name, etc. We will do this until we reach the max in a personal name which is 5. After that, we would have to create a llc. How do we approach taxes if the first home is in my name and not his? It sounds like I'd benefit from depreciation or losses but he wouldn't. Thoughts?

Treat as a joint venture and each of you report 1/2 the results equally.  On most of these we'll report 100% of the activity to match any 1099s and then our software will take a 50% allocation at the bottom of schedule E.  In my case I like to be one preparing the schedule E and related depreciation (so I know it's right) and then provide a copy of it to the other partner.

[je100]

Treat as a joint venture and each of you report 1/2 the results equally.  On most of these we'll report 100% of the activity to match any 1099s and then our software will take a 50% allocation at the bottom of schedule E.  In my case I like to be one preparing the schedule E and related depreciation (so I know it's right) and then provide a copy of it to the other partner.

Why wouldn't a 1065 work?  Would the tax filing method (whether divided individually without a pass-thru as you suggested, or by 1065) affect the legality of the ownership of assets, and visa versa?

Or maybe I misunderstood......

[hog.goblin]

Why wouldn't a 1065 work?  Would the tax filing method (whether divided individually without a pass-thru as you suggested, or by 1065) affect the legality of the ownership of assets, and visa versa?

Or maybe I misunderstood......

Practically speaking I wouldn't have a problem with that.  But if they are buying more homes the lender may get confused by assets titled in their individual names being listed in a partnership name and EIN for tax purposes.

[je100]

Practically speaking I wouldn't have a problem with that.  But if they are buying more homes the lender may get confused by assets titled in their individual names being listed in a partnership name and EIN for tax purposes.

True.