Mortgage Interest Expenses with Partners

[Jason Iskarpatyoti]

I have a rental property that I co-own with two other owners.  We obtained a mortgage on the property, however, due to issues with getting my partners qualified in the mortgage process, the mortgage is specifically in my name.  With that said, each of my partners contributes to a third of the mortgage each month.  So my question is, when filing my taxes this year, can we all claim 1/3 or the mortgage interest as an expense on the Schedule E form?  Is there some form of paperwork my partners should have to properly claim this expense?  

I hope that's enough information to answer my question, but I'm happy to provide more if necessary.  Thanks!

[Ashish Acharya]

@Jason Iskarpatyoti , 

Do you have a partnership agreement? The agreement would have dictated how you guys allocate the rental items, 

If you dont have a partnership agreement, you can just co-own the property, but with your situation, I feel like the partnership is created as just one of the partner is on the loan which created a basis for you but not for other partners. 

If you have a partnership, you would file 1065 first as the partnership return and then report your share of activity in the schedule E. 

Also as the cash out refi was done, other partners probably dont have a basis to deduct losses, if you have a loss. You have the debt basis on the partnership as you are on the loan. 

In these kinds of deals, capital accounts have to be properly accounted for and need to have a partnership agreement with some specific clause if your other partner wants to benefit from the loss. 

@Eamonn McElroy , do you agree? Please add more, as this kind of deals is always a headache to account for. 

@Account Closed