Who claims income w/ 50% ownership

Question

Hello all,

I’m in the process of doing taxes and my CPA is suggesting I split my income and expenses 50/50.

I have a mortgage on a property with a relative (to help me qualify for the mortgage) and my relative is also on the deed; so we’re 50/50 on the loan and deed.

My relative understands that I receive all of the income and pay all of the expenses on the property.

On my taxes last year I claimed all of the income on the property and all of the expenses.

This year the CPA says that the income and expenses on my taxes should be 50% since that’s the ownership stake with my relative; and that my relative should show 50% of the income and expenses on the return.

What’s your take on this?

Should I continue to report 100% of the income and expenses under my name?

Thanks

Andy

Andy R. · Answer

@Greg Scott and @Logan Allec Thank you both for your input!

Thank you @Carl Fischer for the actionable advice. I'll be putting together a document.

Carl Fischer · Answer

@Andy Ramirez

Because both people are on the loan and deed doesn’t necessarily mean it’s 50/50. Get a lawyer to help create a document for you and your relative so there is no misconception. What would happen if one of you was hit by a bus tomorrow? Who explains what to whom? What does agreement say and what do tax returns show. All should be consistent. Your relative can quit claim her/his interest in the property to you and still be on the loan. There are many ways to structure the documents to meet your goals. Get with someone who knows how to do what you want done.

Logan Allec · Answer

@Andy Ramirez You may very well have a partnership...

Greg Scott · Answer

It makes me nervous that you said "My relative understands that..."   Hopefully you have a written agreement with your relative.   If you do not, that should be the very first thing you fix.  It puts you both at risk if you do not have a formal agreement.   Get a lawyer.

If your agreement states that you get 100% of all proceeds from the investment and have responsibility for all of the costs, that is what should be on your return.