co-owning LTR with my dad

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co-owning LTR with my dad

Yevgeniy Vayntrub
Member since 2026 · 5 posts · 10 votes

I'm a first time real estate investor, thinking of investing in a property with my dad to share some of the risk (and reward) and see if this game is for us. I have a question about the finances, in terms of how the profits and tax write-offs are to be shared in this situation? Or do we absolutely have to form an LLC?

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Aaron ZimmermanBusiness Member
Accountant · Chicago, IL · Member since 2018 · 2k+ posts · 1k+ votes
5mo

You don't necessarily need an LLC but you would want to get an operating agreement spelling out the roles and responsibilities as well as ownership %'s

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  • Janice Carter
    Real Estate Broker · Atlanta · Member since 2024 · 1k+ posts · 604 votes
    5mo

    @Yevgeniy Vayntrub You don't have to form an LLC. Plenty investors start by holding property jointly. The key is how you structure ownership and reporting. If you buy together personally, profits and tax write offs are typically split based on ownership percentage. Many partners use a simple partnership agreement to clearly define profit splits, responsibilities and exit strategy. While an LLC isn't required, it can help with liability protection and cleaner accounting especially as you scale. Just make sure everything is documented upfront and it would be worth talking to a CPA so you structure it correctly from day one.

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  • Aaron ZimmermanBusiness Member
    Accountant · Chicago, IL · Member since 2018 · 2k+ posts · 1k+ votes
    5mo

    You don't necessarily need an LLC but you would want to get an operating agreement spelling out the roles and responsibilities as well as ownership %'s

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  • Joel Miller
    Member since 2011 · 152 posts · 113 votes
    5mo

    An LLC keeps the liability claims generated by the property to within the LLC, but its operations are reported to the IRS just like those of a general partnership. In a general partnership, all partners are 100% liable for the partnership's liabilities, and creditors can claim against each partner's assets outside of the partnership. If you title the property jointly with anyone other than your spouse, you have automatically created a general partnership (whether you have an operating agreement or not), and you will need to file partnership tax returns. So, since the reporting requirements are the same for partnerships and LLC's, you might as well form an LLC and enjoy the liability protection.

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  • Ashish AcharyaBusiness Member
    CPA, CFP®, PFS · FL · Member since 2017 · 5k+ posts · 3k+ votes
    5mo

    Aaron and Joel made a good point that you don't necessarily need an LLC to get started. If you buy the property together, Joel is right, it's typically treated as a partnership for tax purposes, and income, expenses, and depreciation are split based on ownership percentages.

    From a tax standpoint, the key is making sure that the split is clearly defined and documented. Even without an LLC, you should have an agreement in place outlining ownership, profit splits, responsibilities, and what happens if one of you wants out. That's what drives how everything is reported on your returns.

    From there, you're still able to write off a lot from a tax perspective, things like mortgage interest, property taxes, insurance, repairs and maintenance, property management, utilities (if you cover them), and depreciation on the building itself. Those deductions are what really make real estate powerful from a tax standpoint, regardless of whether it's held in an LLC or not.

    An LLC can still be helpful for liability protection and cleaner accounting, but it doesn't, by itself, change how the income is taxed. Most of the benefit comes from having a clear structure in place from day one, especially when partnering with family.

    As you grow, it might be worth connecting with a real estate–focused CPA who can help you see how these properties start to interplay with your broader tax strategy, especially if you’re thinking about scaling, offsetting other income, or layering in more advanced strategies down the line. Happy to connect!

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  • Drew SygitBusiness Member
    Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 8k+ votes
    4mo

    What happens if one of you is sued for something else?

    One of you dies?

    One of you wants out, but the other doesn't or can't?

    You will need either an Operating Agreement for an LLC or a Partnership Agreement, spelling all this out.

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  • Yevgeniy Vayntrub
    OP
    Member since 2026 · 5 posts · 10 votes
    4mo

    Thank you everyone for the advice. It seems like an LLC is the way to go for me, particularly from the liability perspective.

    My follow-up question is, does an LLC make it harder to secure future funding? We will be funding this purchase with cash, but my goal would be eventually to get some sort of loan against the property, and use that to invest in another property. Does an LLC make doing this, or getting good terms on it, significantly more difficult?

    I read that sometimes/often, when you try to do this with an LLC they will want you to personally guarantee the loan. Would this count as "piercing the veil" and undermine the entire purpose of the LLC?

    Thanks again,

    Yev

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  • Basit SiddiqiBusiness Member
    Accountant · New York, NY · Member since 2015 · 8k+ posts · 3k+ votes
    3mo

    If you or your dad never aquired a rental property before, acquiring the property with 2 people will make things more complicated.

    Financing, tax returns, decision making all becomes more difficult.

    A successful partnership requires the following - Money, Experience and time.

    What skill do you bring and what skill does your dad bring in?

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  • Jason MalabuteBusiness Member
    Accountant · Los Angeles, CA · Member since 2016 · 2k+ posts · 895 votes
    3mo

    You don't actually need an LLC to invest in a rental together, plenty of people start out just owning a property jointly. When you co-own a rental, each of you simply reports your share of the income, expenses, and depreciation on your own return based on your ownership percentage, so the tax side isn't dependent on having an entity. The most important thing is to put the arrangement in writing up front: who owns what percentage, how profits are split, who handles what, and what happens if one of you wants out. You still get all the usual write-offs either way, your share of mortgage interest, property taxes, insurance, repairs, management, any utilities you cover, and depreciation on the building. An LLC can be worth it for liability protection and cleaner books, but on its own it doesn't change how the rental income is taxed. Since this is your first one and you're going in with family, the right setup really depends on your situation, so it's worth running it by your own CPA before you jump in.

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