Discussion:Disclosure requirements rental property nominee distribution for mortgage interest
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Discussion Forum Index --> Tax Questions --> Disclosure requirements rental property nominee distribution for mortgage interest
| 2 February 2008 | |
| Hi.
Client qualifies as a real estate professional and files as a two-member LLC. Mortgages on some of their properties are in others' names, although client pays all expenses (including mortgages), and collects rent. I understand that through Reg Sec 1.163-1(b) client may deduct mortgage interest. Is client required to file anything with Service to indicate they are really the beneficial owners of the properties (nominee distribution?)? Beyond that, are there any disclosures that I as the paid preparer must include on the income tax return to make the Service aware that the expenses are, in fact, my client's? Thanks. -Adam- | |
RoyDaleOne (talk|edits) said: | 2 February 2008 |
| Do you mean title to properties are in some other name?
The mortgage is the pledge of the collateral. Paying and collecting the all the rents and expenses does not in itself make anyone the beneficial owner of real property. The ownership of real property in most states must be in writing, and in some states must be recorded to be effective. Just a comment. No and no as an answer I agree. | |
| 14 May 2008 | |
| Have a similar situation with an LLC. The mortgages on the two rental properties are in the father's name who is 1/2 partner with 2 sons. The father and 2 sons quit claimed the properties to the LLC. They have a checking account in the LLC name and have been paying the expenses out of the LLC account. From the posts on equitable ownership, the Saffet Case and reg 1.163-1(b, it seems that it would be ok to claim the interest and taxes on the properties on the LLC return. Just wanted some assurance that this would be correct. | |
