Hackitoff - thank you for the thoughtful reply. I'm going to reply here point by point.
I just want to start off by saying just because I'm not planning on forming an entity to decrease administrative burden & costs, that doesn't mean that an operating agreement won't be in place.
- Joint-ownership: I completely understand the difference between legal entity and how something is taxed. I'm aware that you're automatically in a partnership if you start a business with someone, whether or not you have an operating agreement or legal entity in place.
- Mortgage liability: completely understand that the person not on the mortgage can walk away without consequences with the bank. However, the operating agreement will provide recourse to the "loan partner" in case this happens.
- Name on deed: my understanding is that you can have names on the deed that are not on the mortgage. This is usually one's spouse or family member. Asking this preemptively in case having a non-spouse & unrelated individual on the deed causes issues during closing. I also appreciate the fact that adding/removing individuals from the deed can affect the mortgage and once again, an operating agreement will be in place to dictate the terms of the partnership, including sale.
- Expense deductions: Having been self-employed, I understand that you can only deduct what you spent. Just wanted to check that there were no gotchas related to "only the person named on the mortgage can deduct interest expenses" or "only the person on the deed can deduct operating expenses: taxes, repairs, etc". A joint bank account would be established for this specific property.
I hope that helps clarify what I was trying to check. Let me know if have any other thoughts. Thanks!
