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Splitting ownership means splitting tax

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in Small Business Tax

Q: I'm buying rental property with my brother for $425,000. Although we are joint owners with 50 percent ownership rights each, I'm putting $50,000 down, and he is putting down only $30,000. Will I be taxed on more of the rental income? S.S., via e-mail

A: No. If you legally own the property 50/50, half the income is taxable to you and the other half to your brother. This assumes that your brother takes on a greater share of the mortgage debt on the property, since your down payment was greater. When you sell the property, the amount of the taxable gain will reflect your basis of $50,000, plus your share of the debt used to buy the place. Note: State law may affect the taxation of your jointly held property.

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