Tax

Have a tax question? Ask a tax Expert

Ask an Expert,
Get an Answer ASAP!

This answer was rated:

A newly form partnership purchase real estate residential…

Hi Steve,A newly form partnership...
Hi Steve,A newly form partnership purchase real estate residential rental in 2017. The partners (husband and wife) are foreigners (Canadian). They took out a mortgage from their Canadian home and purchase the real estate rental in the USA partnership. I don't think they can deduct the mortgage interest in the USA return. Can you confirm that? The interest would be treat as investment interest in their personal return but I don't think it can directly offset the rental income.
Show More
Show Less
Ask Your Own Tax Question
Answered in 2 hours by:
3/9/2018
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 33,310
Experience: Taxes, Immigration, Labor Relations
Verified

If the loan was used to purchase a rental property - the interest on THAT loan may be deducted as rental interest.

That is not an issue.

There is no requirements to use the rental property as a collateral as long as the loan is clearly related to purchase.

That actually means - loan proceeds were contributed into the partnership within 30 days after the money were provided.

If loan proceeds were partially used for rental activity - and partially for other reasons - then need to apportion and ONLY rental part will be deducted.

Because the US partnership is NOT paying that loan directly - on the partnership books - it will be reported a reimbursement to the partner.

Is that Nevada partnership?

Questions?

Ask Your Own Tax Question
Customer reply replied 5 months ago
Hi Lev,That is a partnership in MI and the rental is locate at MI as well. Based on what you state above, they still can deduct the mortgage interest on the rental directly. so in accounting term. the following entry will be done. please confirm
Dr Cr
Interest expenses XXXXX
Capital contribution XXXXX

I do not see any issues to deduct interest - it it was clearly used for that purchase.

You may treat additional interest expenses as partner's capital contribution - that is OK

But it might be more clear to have that interest reimbursed to partners when paid.

But that will not make much difference - you may treat it as additional capital contribution.

Ask Your Own Tax Question
Customer reply replied 5 months ago
Lev,Shouldn't we record the loan on the book as well. It would like funny that there is interest expenses but no loan on the balance sheet. Should the loan be also record?

Because the loan is not on partnership books - you may not record it.

These are interest expenses of the partner paid in relation to the partnership and which are reimbursed by the partnership.

That might be not standard items on books - but that what we have.

Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 33,310
Experience: Taxes, Immigration, Labor Relations
Verified
Lev and 87 other Tax Specialists are ready to help you
Ask your own question now
Customer reply replied 5 months ago
Thank you Lev
Was this answer helpful?

How JustAnswer works

step-image
Describe your issueThe assistant will guide you
step-image
Chat 1:1 with a tax professionalLicensed Experts are available 24/7
step-image
100% satisfaction guaranteeGet all the answers you need
Ask Lev Your Own Question
Lev
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 33,310
33,310 Satisfied Customers
Experience: Taxes, Immigration, Labor Relations

Lev is online now

A new question is answered every 9 seconds

How JustAnswer works:

  • Ask an ExpertExperts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional AnswerVia email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction GuaranteeRate the answer you receive.

JustAnswer in the News:

Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.

What Customers are Saying:

I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response...

T.G.WMatteson, IL

I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight.

BonnieChesnee, SC

Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation.

JohnMinneapolis, MN

Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with.

OrvilleHesperia, California

Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help.

Mary C.Freshfield, Liverpool, UK

This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!!

AlexLos Angeles, CA

Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult.

GPHesperia, CA

< Previous | Next >

Meet the Experts:

Wallstreet Esq.

Wallstreet Esq.

Tax Attorney

586 satisfied customers

10 years experience

Mark D

Mark D

Enrolled Agent

1,338 satisfied customers

MBA, EA, Specializing in Business and Individual Tax Returns and Issues

Richard

Richard

Tax Attorney

4,512 satisfied customers

29 years of experience as a tax, real estate, and business attorney.

PhillipsEsq.

PhillipsEsq.

Attorney-at-Law

59 satisfied customers

B.A., M.B.A, J.D.

Robin D.

Robin D.

Senior Tax Advisor 4

15,569 satisfied customers

15years with H & R Block. Divisional leader, Instructor

Megan C

Megan C

Certified Public Accountant (CPA)

8,655 satisfied customers

Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level

jgordosea

jgordosea

Enrolled Agent

2,885 satisfied customers

I've prepared all types of taxes since 1987.

< Previous | Next >

Related Tax Questions
1. A Non-USA investor (say from India residing outside USA)
1. A Non-USA investor (say from India residing outside USA) invests $100,000 into a US registered LLP to own a 10% share of the LLP; 2. The LLP then buys a Real estate asset - say ABC Homes LLC regist… read more
Alexander Efros
Alexander Efros
Masters of Business Administration (MBA)
122 satisfied customers
A real estate partnership has several rental properties. The
A real estate partnership has several rental properties. The partnership has been in existence over 30 years and has only a couple mortgages.The partnership has no other activity except renting real e… read more
Dr. Fiona Chen
Dr. Fiona Chen
President
Ph.D.
1,410 satisfied customers
I have a final partnership return, where one partner is
I have a final partnership return, where one partner is transferring all interest to the other, effectively closing the partnership. Should the exiting partner's capital account be zero'd out and the … read more
PDtax
PDtax
Owner
Master\u0027s Degree
1 satisfied customers
When a partner contributes depreciated rental property to a
Hi, when a partner contributes depreciated rental property to a partnership, does the partner report anything on partner's individual tax return? Such as a transfer or disposition on Form 4797? … read more
Lev
Lev
Tax Advisor
Bachelor's Degree Equivalent
33,310 satisfied customers
Tax question: A partner took out a loan from Partnership A
Tax question:A partner took out a loan from Partnership A to finance Partnership B. Partnership A issue a mortgage statement Form 1098 in box 1. The Form 1098 was issued to his personal name. How shou… read more
Mark Taylor
Mark Taylor
Certified Public Accountant
Masters
2,328 satisfied customers
I would like to get some feedback on the percentage of
Hi,I would like to get some feedback on the percentage of capital gain due for a non-U.S. citizen on a CA property (when it's time to sell) and what is the best way to buy a property in California for… read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
Second opinion] I have residential rental properties but am
Second opinion] I have residential rental properties but am not a Real Estate Professional. I have a separate purchased garage property used for storage of equipment used in the rentals. How and what … read more
keeperumiami
keeperumiami
Sr Financial & Tax Consultant
Bachelor\u0027s Degree
1 satisfied customers
Candian A want to transfer 50% of the real estate rental
Candian A want to transfer 50% of the real estate rental property ownership to another Canadian. Will that be any gift tax implication or should they sale the property to the other Canadian… read more
Lev
Lev
Tax Advisor
Bachelor's Degree Equivalent
33,310 satisfied customers
Balance Sheet 1065 Partnership. The building asset is
Balance Sheet for a 1065 Partnership. The building asset is debited and partner;'s capital is credited for the amount of the building. I am refereeing to last years return prepared by another accounta… read more
keeperumiami
keeperumiami
Sr Financial & Tax Consultant
Bachelor\u0027s Degree
1 satisfied customers
Form 8938 question. I own 1% interest in a foreign
form 8938 question. I own 1% interest in a foreign partnership which owns some foreign rental real estate. It receives income from rentals. Does my interest have to be reported on form 8938?… read more
Lev
Lev
Tax Advisor
Bachelor's Degree Equivalent
33,310 satisfied customers
How do I convert the multi member LLC treated as partnership
How do I convert the multi member LLC treated as partnership into a single member LLC disregarded entity? which forms must be submitted? Do you update the EIN too?… read more
taxmanrog
taxmanrog
Master\u0027s Degree
1,053 satisfied customers
Good day Lane. I hope it finds you well. I have that same FLLP
Good day Lane. I hope it finds you well. I have that same FLLP whos partners are all foreigners. They plan on selling some Canadian property and buy real estate (residential rental) here in the states… read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
LLC K-1, section K regarding Partners share of liabilities:
LLC K-1, section K regarding Partner's share of liabilities: 4 member-managers each with a 25% interest; mortgage on rental property of $500,000; what type of liability is this for each partner (Nonre… read more
keeperumiami
keeperumiami
Sr Financial & Tax Consultant
Bachelor\u0027s Degree
1 satisfied customers
A husband & wife are purchasing a residential rental property.
A husband & wife are purchasing a residential rental property. What business structure do you recommend?… read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
15,569 satisfied customers
I have 2 investment properties in PA which I purchased under
I have 2 investment properties in PA which I purchased under my name and my wife's name. I had also created an LLC for real estate investment to manage the property. The rental income is breaking even… read more
Lev
Lev
Tax Advisor
Bachelor's Degree Equivalent
33,310 satisfied customers
I have a single family home that I use in my rental real estate
I have a single family home that I use in my rental real estate LLC. For 2011, my mother lived in this house and did not pay rent. As a result, it was rented below fair market value for 365 days and a… read more
jgordosea
jgordosea
Enrolled Agent
Bachelor's Degree
2,885 satisfied customers
I have 4 rental properties...3 residential and 1 commercial.
I have 4 rental properties...3 residential and 1 commercial. Can I elect to group the residential properties only, allowing me to take active losses under the guidlines of IRC469(c)(7)(A)? The commerc… read more
BK-CPA
BK-CPA
Bachelor's Degree
687 satisfied customers
P, a 2-person personal service cash basis partnership, dissolved
P, a 2-person personal service cash basis partnership, dissolved in 2009. The two partners shared all p'ship items 50/50. At the time of dissolution, P's assets consisted of cash, receivables, and mor… read more
Jon Andrews
Jon Andrews
CPA
2,926 satisfied customers
Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Show MoreShow Less

Ask Your Question

x