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Barrister
Barrister, Lawyer
Category: Real Estate Law
Satisfied Customers: 33703
Experience:  15 years real estate, Realtor. Landlord 26 years
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My husband and I are cobuying a property with my brother. We

Customer Question

My husband and I are cobuying a property with my brother. We live in MD. He lives in San francisco, CA. This is where the property is been purchased. We will not reside there. However, we are going 50/50 with the purchase. How do we protect our investment. ? We own a home in MD. What are the tax implications for both parties. What legal document/agreement is needed to protect both parties.?
Submitted: 1 month ago.
Category: Real Estate Law
Expert:  Barrister replied 1 month ago.

Hello and welcome! My name is ***** ***** I am a licensed attorney who will try my very best to help with your situation or get you to someone who can. There may be a slight delay in my responses as I research statutes or ordinances and type out an answer or reply,but rest assured, I am working on your question.

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Will you both be on the deed to the property?

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Is this a rental property, a flip property, something else?

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What are you wanting to be protected from? each other? being sued? personal liability?

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I need a few more details about your question so I can provide a complete answer....

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thanks

Barrister

Customer: replied 1 month ago.
I would prefer to be on the deed... however, not sure if this is possible since we will not be living in the property.Its a multiunit property, 2 levels, my brother will reside in one, and the other will be rented.I trust my brother, however i am married with children... since this is a significant investment, i need to know what i should be doing to protect our interests. For eg, if something happens to either party, how will this affect the other person, financially, legally...What are the possible tax implications.?My brother is solely on the bank loan, however we are 50/50 with costs such as downpayment, renovation etc. So essentially we will have 50% of equity.
Expert:  Barrister replied 1 month ago.

Ok, living there has nothing to do with being the deed.. And it would be an extremely good idea for one or both of you to be on the deed with brother. The deed determines who owns the property.

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If you make sure the deed states "tenants in common" then you own 50% and brother owns 50%. If either of you pass, your estate then becomes the owner of half the property and it passes down to your heirs. You don't want "joint tenants with right of survivorship" because if one of you passes, the other becomes the sole owner..

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For liability purposes, you may want to consider setting up an LLC to own your half so that you can't be held personally liable if something were to happen on the property. The LLC would shield you from liability and limit any exposure to only the property, not your other personal assets.

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As for tax, you would just declare any rents on your taxes as normal income and would be able to deduct half of any expenses for upkeep, maintenance, repairs, property taxes, etc. If you are contributing towards the mortgage, then you would be able to deduct that percentage for interest on your taxes by itemizing it on Schedule A.

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You will need to figure out how the rent division is going to work her with brother living in half... Do you get all the rent for the other unit? Or is brother going to pay rent?

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If he is not paying rent, then you need to figure out a fair division of rents because he would be getting a "free" place to live...

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And it kind of goes without saying that you need to have this entire agreement in writing signed by both parties so there is no confusion later about what you have agreed to..

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thanks

Barrister

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