Tax Guidance on partnership in rental property
Hi, so a partner bought a duplex back in February. He was able to purchase with a low down payment. We had an agreement that we would split the closing costs/down payment for a 50% share in the property. Agreement is to split profits 50/50 as we co-manage the property together. When it was bought though we decided it was best to put solely in his name for the title and mortgage for financing purposes. Now I understand from a legal standpoint that most people would warn against this kind of handshake agreement, which I wouldn't recommend to anyone either, however we wanted to jump into it so that is where we are. We now have an LLC together for all of our future deals, but this property remains outside of it. When it comes to tax time what is the best way to go about it so we can split the the tax advantages of owning a rental property together? Can I take 50% of the depreciation of the property along with the profits? Should I come up with another strategy where he takes 100% of the depreciation now, and later when we roll it into an LLC then I claim the depreciation at a later time. In the end we are both open to whatever and what makes the most sense. Just wanted to pose the questions to you guys before talking with a CPA, and see if you have seen it before. Thanks for your inputs!!!