My computer ate my first post, so I wrote this one in a hurry. Hopefully everything makes sense.
Hi all, long-time reader of MMM, and the forums have provided some really good practical information along the way to growing my 'stache.
I'm about to venture into real estate investment by buying my first rental property. I'll probably be drafting a contract today or tomorrow, but before I get too far into this, I had a couple questions about taxes in my situation.
I was talking to an old friend of mine a while ago, and mentioned that I was saving up to buy rental property in areas near me. They were looking at the time to diversify their investments, and offered to be a 'silent investor', ie contribute to the downpayment, but not be directly involved in any of the day-to-day. We agreed upon some property specifics, got the money transferred, I found a property, worked out financing etc etc etc
1. My friend lives overseas full-time, working for a US non-profit (US citizen, though). I've read through the Schedule E instructions, and the stuff about foreign partnerships seems to be the most relevant to my situation - ie I should issue a 1042-s to my friend each year. Is that correct? Or should I be issuing 1099's or maybe even let them just declare the income on their own schedule E without worrying about all the other stuff? Please point me in the right direction.
2. The plan currently is for my name to be on the mortgage/title etc. Should I try to have them sign as well, so they can benefit in some way (ie on mortgage interest or depreciation deductions)?
3. Any other ideas about how to split any income? I will say that I've spent quite a bit of time on this already. We aren't quite 50/50 on the downpayment/closing costs. They are <10 yrs from retirement, and I'm only in my early 30's, so our short/long-term goals probably differ quite a bit. They seem pretty chill about the whole thing though; I just want to make sure I'm giving both parties a fair deal, and also not giving my friend any horrible surprises come tax time 2019.
Thanks all,
jon
