condominium investment

[mfanning]

My question in it's simplest form is:
What is the best way to purchase a investment comdominum property with a family member. I reside in Ohio, brother lives in New York, and investment property is in Florida. How can I arrange this transaction to offer the maximum benefit to both parties?
I currently own a home in the cleveland area and my brother rents in New York. He could obviously use the tax write off but I'm not sure of the best way to set this up. Open to suggestions.

Thanks.

 

[Tracey]

You can only write off mortgage interest on your primary residence. (I'll double check with mom the tax deity tomorrow and correct this if necessary.)

By investment, do you mean you plan to rent out the condo and make money from it? Crunch the numbers carefully. Rental properties that give you a positive cash flow are rare. You get to deduct the entire mortgage payment as a business expense.

Maximum benefit and protection for both of you would probably be to form an S-corporation and run the condo as a business. Keep the condo's finances entirely separate from your own!! You could also set up a limited liability partnership/corp or just run it together as a p'ship.


Clear as mud?
Tracey


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This is not legal advice and you are not my client. Double check everything with your own attorney and your state's laws.

 

[Tracey]

Mom the tax goddess thinks I'm an idiot...

When you have a rental property, you get to deduct the mortgage interest and taxes (schedule E), then you depreciate the property (over 27.5 years). The deductions/depreciation are split between the owners in proportion to their ownership share.

When you sell, you reduce your basis in the condo by the allowable depreciation, whether you depreciated the place or not.

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This is not legal advice and you are not my client. Double check everything with your own attorney and your state's laws.