Discussion:Imputed rent - equity sharing

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Discussion Forum Index --> Advanced Tax Questions --> Imputed rent - equity sharing
Discussion Forum Index --> Tax Questions --> Imputed rent - equity sharing

Gerbie1987 (talk|edits) said:

15 March 2008
My client (Investor) is on title to a home; she owns 33.3% and Occupier owns 66.6%. Occupier obtained the mortgage solely in his name and pays the mortgage. Since she is not liable for the mortgage and does not pay any of it, would 1/3 of the mortgage payment still be imputed to be rent to her? I'd really appreciate some help on this one.

I am fairly new to this forum and not sure how all this works; I tried to continue a previous discussion on this topic but got no responses - apparently it is now closed (it was from a month ago).

PostingFromWork (talk|edits) said:

15 March 2008
26 USC 280A(d)(3) as cited in the other thread.

Gerbie1987 (talk|edits) said:

15 March 2008
So in the cite mentioned, are you implying the word "financing" in 280A(d)(3)(B)(i), the phrase "Rental must be pursuant to shared equity financing agreement" means that since she's not on the loan, it doesn't apply to her?

In 280A(d)(3)(C), "Shared equity financing agreement" is defined as an agreement under which (i) 2 or more persons acquire qualified ownership interests in a dwelling unit and (ii) the person holding 1 or more of such interests...etc, etc. It seems to me like it is talking about the equity share agreement, not a lending agreement; it says nothing about a loan or that they must both be on the loan. They do have an Equity Share agreement, and it has the rental clause, but it says the Occupier is required to pay rent of $0 per month to the Investor.

So my question remains, if she is not named on the loan, would 1/3 of the mortgage interest still be imputed to her as rent? It does not seem so to me, but I don't want to underreport her income. We would offset it with depreciation (her only expense) which would then impact her basis on sale of the property.

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