Co-ownership or partnership of a condo....

recycled sixtie · recycled sixtie's Garage

Just starting my income tax and would like to know whether a condo owned by husband and wife (50/50) for tax purposes should be co-ownership or partnership?
I know US tax laws are different but are there any glaring legal implications? Or possible tax consequences?

Scooter · 01-30-2013, 02:41 PM

Is the property held for business purposes? If so, an LLC may be appropriate for tax or liability reasons. If you are figuring taxes for last year, then the LLC idea is too late.

Since 50/50 ownership is normally an implied partnership, there should be no tax consequence.

If it is a vacation home with no rental, then your property normally does not have a business purpose and cannot be held as a business.

These comments are merely in general terms of course. Your situation may require addition information and planning.

Dantilla · 01-30-2013, 03:35 PM

With US tax law, isn't a married couple treated as one entity?

Unless "Married, Filing separately", of course.

McLovin · 01-30-2013, 03:56 PM

Co-ownership would be easier for tax purposes, at least in the US.

A partnership is a separate legal entity. If it were held in a partnership, the partnership would have to file a separate tax return. The partnership would have to issue K-1s to each partner. Etc.

recycled sixtie · recycled sixtie's Garage

Quote:

Originally Posted by McLovin

Co-ownership would be easier for tax purposes, at least in the US.

A partnership is a separate legal entity. If it were held in a partnership, the partnership would have to file a separate tax return. The partnership would have to issue K-1s to each partner. Etc.

I just looked it up in the Can. Revenue Agency rules. I conclude the main defining difference is that the partnership is set up with the intention of making a profit.
We purchased the condo with the eventual idea of our living there. So we rent it out in the meantime. As you mention there is more paperwork to set up a partnership.
Co-ownership seems to be the better way to go. There is another difference in that a business such as property rental may supply more than just a place to live. I think that I will have to do more research......

Thanks everybody for your opinions.