Sch E

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Three years ago we bought a rental property and my brother contributed 20%. He is not listed on the deed as an owner. I pro-rate my entries on Sch E to reflect our 78%. Can I do the same with my brother?

Thanks!!

Dan Starr

Answer

I may disagree with Carl. There is a legal concept called equitable ownership - the other party does not need to be on the title or mortgage. see the link. https://www.taxcpe.com/blogs/news/equitable-ownership-and-mortgage-deductions

we are not lawyers and this is something that may require a legal resolution that should be in writing. possibly finding yourself in court and needing a lawyer gets to be expensive. there are also the tax issues of whom should be reporting what. This presents significant current and future issues for both party's taxes.

Carl

Level 11

Three years ago we bought a rental property and my brother contributed 20%. He is not listed on the deed as an owner.

That means your brother has no legal obligation to pay the property taxes, and therefore can not claim or deduct the property taxes even if he pays them. Additionally, if your brother is not on the mortgage loan, then he has no legal obligation to pay the mortgage either and therefore can not claim any mortgage interest; even if he paid it.

I pro-rate my entries on Sch E to reflect our 78%.

Why 78% and not 80%? Do "what" the same as your brother? As it stands right now, I don't see any reason or requirement for your bother to be reporting "anything" on his tax return concerning this rental property; assuming his name is not on the mortgage either. As it stands right now, I would be expecting you to be reporting 100% of everything concerning this rental, on your own tax return.

Can I do the same with my brother?