Form of Ownership - Posted by raiko

Posted by Terry (Houston) on September 09, 2001 at 19:58:44:

Thansk,

Did not want to word that wrong.

T knew you would be able to tell it clearly.

Terry

Form of Ownership - Posted by raiko

Posted by raiko on September 09, 2001 at 18:17:03:

I have an ownership question I would appreciate feedback on.
A friend of mine and I purchased a house about six years ago. The loan and title are in his name. I just pay half the mortgage each month. As it stands we only have a verbal agreement about our 50/50 ownership. What would be the best way to put it in writing? Some sort of trust or perhaps an LLC? I live in California. Any input would be greatly appreciated.
Thanks,
Jeff

Re: Form of Ownership - Posted by Bud Branstetter

Posted by Bud Branstetter on September 09, 2001 at 22:57:23:

Forming an agreement now is esential. But also investigate going back and filing amended tax returns. I do not know if this was rental property or more likely homestead. You may have not itemized but you need to establish a basis for the property. I would be deeding it into a trust, but you likely should be seeing an attorney.

Re: Form of Ownership - Posted by Terry (Houston)

Posted by Terry (Houston) on September 09, 2001 at 18:30:05:

They say in real estate that a verbal agreement is worth the paper it is written on.

You could probably go to court to prove ownership if things went wrong between you and your partner but that could be very costly.

On thing you could do right now is to deed the property into a trust with the beneficial ownership called out at the 50/50% you describe.

That would be the least costly way. You could also write up a Joint Venture for this deal, and any others you work with him. Make sure each of your responcibilities are called out.

With putting the property into a trust the loan would stay in his name but you would be protected.

A JV will give him protection if you stop performing and make him comfortable about the loan being in his name.

Hope that helps.

Terry

Re: Form of Ownership - Posted by raiko

Posted by raiko on September 09, 2001 at 18:35:07:

Assuming we sell the property how would this type of ownership affect our tax liabilities? We have both lived in the house over two years and I can see how he would have his equity shielded from taxes because he is on title but what about mine? Would the IRS look at my equity as being taxable since I’m not on title?
Thanks,
Jeff

Re: Form of Ownership - Posted by JHyre in Ohio

Posted by JHyre in Ohio on September 09, 2001 at 19:50:02:

The fact that you’re not on the title shouldn’t kill your exclusion. If the ownership is through a trust or an LLC treated as a partnership you are likely to still benefit from the exclusion. Documenting your share of the thing via trust or LLC agreement would help verify your de facto ownership…and protect you if things should ever go south with your associate.

John Hyre

John Hyre??? - Posted by Terry (Houston)

Posted by Terry (Houston) on September 09, 2001 at 19:10:58:

You have been in this transaction for 2 years without anything in writing?

I would say this advice may need to come from a CPA.

I do not want to give the wrong advice on a sensitive subject.

I know what I would do but let’s hear from the experts in this field.

Terry