Accounting question sharing mortgage makes it a partnership?

[reinvtoronto]

Hi there!



I am preparing income tax now and got stuck on a partnership question.



I and my partner got a mortgage together but I do all property management and so on.

Does this mean we are automatically a partner sharing 50/50?



I read CRA website but I got a bit confused.



Does anyone have a clear answer to this?



Thank you!!

 

[Thomas Beyer]

What does your agreement state ? You could share it 60/40 or 30/70 !



Presumably it is 50/50, so you prepare a statement showing all revenues and expenses, and then allocate 50% to each party. Each party files their own taxes using form T776.

 

[reinvtoronto]

Thank you Thomas for your reply.



By the way your book was awesome and everyone should read it!!



I assume I can find it in lawyers documents?

 

[Thomas Beyer]

[quote user=reinvtoronto]I assume I can find it in lawyers documents?
the book ?

 

[reinvtoronto]

Ah sorry no partners ratio my question.

 

[Thomas Beyer]

[quote user=reinvtoronto] partners ratio


Well, such a major thing ought to be on your brain, unless you do dozens of deals where such a detail can slip one's mind.



But yes, look for words like "equally" or "pro-rata" unless the words 50/50 or 50% are explicitly stated. Not being a lawyer the word "share" to me doesn't necessarily mean 50/50 as one party could argue "well I put in all this money and this guy did almost nothing and thus sharing to me means 80/20". But I assume for now that you both meant 50/50 by the word "sharing", but yes, look for it in writing.

 

[reinvtoronto]

Hi Thomas Thank you for getting back to me.



I have purchased on my own so my agreement says an individual owner: Me.

However, me and my partner had a mortgage together to pay the rest so we became joint owner.



I found the word, joint owner but I cannot find the ratio.



Do you know usually which section this statement is under?

I am looking at closing statement.

 

[Thomas Beyer]

[quote user=reinvtoronto]joint owner.


This is a legal term, i.e. it implies you both own it. It does not mean a financial arrangement, i.e. 50/50 as it could be 20/80 or 70/30. Differentiate between legal and beneficial (or financial) ownership.