Can partners get a conventional loan?

Question

Basit Siddiqi · Answer

@Megan ElmendorfIf you and your partner own the properties as "tenants in common"; you and your partner will each report your share of ownership on schedule E.Example - If you own the property with a partner with a 50%/50% split with the following income/expense itemsRental income $10,000real estate taxes $2,000Mortgage Interest $2,000Depreciation - $6,000Each partner would report $5,000 of rental income, $1,000 of real estate taxes, $1,000 of mortgage interest and $3,000 of depreciation on schedule E.

Megan Elmendorf · Answer

Thank you this is very insightful!

Ryan Zomorodi · Answer

Yes, definitely. I am considering the same with a business partner on a buy and hold. Spoke to my lender and he said he would just combine our applications and credit worthiness to create a mortgage using our blended qualifications. If you still want the property in an LLC, you can probably use a quitclaim deed to transfer it to your entity.

Jeff Dulla · Answer

@Andrew Barlow yes - you are on the right track now. Spot on with everything you said above.

Dave Van Horn · Answer

@Andrew Barlow Absolutely. I've gotten loans with my in-laws before on multiple occasions, and even took advantage of more favorable financing because of it.

Megan Elmendorf · Answer

@Basit Siddiqi Thanks for the clarification. This is extremely helpful! Thanks!

Dave Van Horn · Answer

@Megan Elmendorf You don't have to be in an entity for this, the deed will specifically state the percentage of ownership and then you'd split proceeds/deductions. In most cases it's referred to as "Tenants in Common" which spells out ownership. A title company should be able to help you set this up.

Megan Elmendorf · Answer

@Dave Van Horn Thanks! We would want to split it 50/50, but if no legal entity exists, how do you claim your 50% on your tax return? My understanding is that we'd need the parternship/LLC tax return that then distributes K-1s. If you don't have that entity, how does the taxation side work?

Dave Van Horn · Answer

@Megan Elmendorf Taxation would be dictated by percentage of ownership on the deed or deed of trust.

Megan Elmendorf · Answer

I realize this post is from quite a long time ago - but how does the taxation side of this business plan work? Say if you don't get an LLC for this partnership and do all conventional loans between the two business partners?

Can partners get a conventional loan?

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