[WSBARP] IRS tax rules say TIC must be equal interests?

[Craig Gourley]

You are correct. If they have elected out of partnership status under section 761 and are truly operating as a tenant in common then they own whatever percentage of the property they are in title to.  They independently deduct their actual expenses paid. So if they paid 20% of the interest, that is what they deduct.   I am presuming the deed says a percentage ownership.  If it is silent, I believe the default is equal shares.  Maybe that is where the CPA's confusion lies.

Gourley Law Group
Snohomish Escrow
The Exchange Connection

1002 10th Street / PO Box 1091
Snohomish, WA 98291

360.568.5065
360.568.8092  fax
Craig at glgmail.com<mailto:Craig at glgmail.com>

From: wsbarp-bounces at lists.wsbarppt.com [mailto:wsbarp-bounces at lists.wsbarppt.com] On Behalf Of Eric Nelsen
Sent: Thursday, September 28, 2017 10:03 AM
To: WSBA Real Property listserve (wsbarp at lists.wsbarppt.com) <wsbarp at lists.wsbarppt.com>
Subject: [WSBARP] IRS tax rules say TIC must be equal interests?

Having a bit of a disagreement with opposing party's CPA about the tax effects of a tenant-in-common ownership between two unrelated parties. For no reason I can discern, the CPA is insisting that the IRS tax/deduction rules (for example, for mortgage interest deductions, payment of property taxes, etc.) only work if the tenant-in-common interests are equal: that is, 50-50, equal thirds, equal fourths, whatever.

So far as I know, the deductions are available proportionate to one's interest regardless of whether it is a mathematically equal interest to the other co-owners. If you own a 22.266% interest, then you can deduct 22.266% of the expenses (assuming that you paid your proportionate share, of course).

Am I nuts? Is there an IRS code or regulation that requires TIC interests to be equal?

Sincerely,

Eric

Eric C. Nelsen
SAYRE LAW OFFICES, PLLC
1417 31st Ave South
Seattle WA  98144-3909
phone 206-625-0092
fax 206-625-9040

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