| Well, officially, you'll have a partnership and should file a partnership return and issue yourselves K-1's. Sound scary? You can probably dispense with it and just have each couple report their 1/2 of the shared income & expenses, along with any expenses specific to each couple. Here's how it would work:
Assume: You all buy the triplex for $150,000. In 2002, you have rents of $12,000, mortgage interest of $8,000, property taxes of $1,000, joint repairs of $500, and legal fees of $200 setting up a lease. Also, you spent another $200 on repairs and your in-laws paid for the advertising/tenant screening.
Your Schedule E would report $6000 rent, and list expenses of $4000 mortgage interest, $500 property taxes, $100 legal fees, and repairs of $450. You would depreciate the building using a basis of $75,000 - 1/2 the value of the land. Your in-laws' Shedule E would be the same, except they would report only $250 repairs and would add the advertising costs. Be sure you both use the same basis for depreciation.
As for the contract, make sure you have it in writing and signed. You should cover: who makes decisions on what repairs to make, who does repair work (and when you hire it out), who picks the tenants, who collects the rent checks, who pays the bills, what you pay if the house is empty and the mortgage is due, how much you keep in a savings account for taxes/future repairs, how to break ties if the 2 couples disagree, and what happens if 1 couple divorces or decides they don't like being landlords anymore. Also, have only 1 person deal directly with the tenants. 4 landlords and 1 tenant is a recipe for miscommunication.
Good luck.
__________________
This post does not constitute legal advice, nor does it create an attorney-client relationship. Postings are based only on the information provided and you should consult an attorney in your area before relying on information contained in this post.
| 
09-01-2002, 01:29 AM
Linear Mode
