Legal Question in Real Estate Law in Maryland
Joint Tenancy with a LLC
I am thinking about entering into joint tenancy of the property I own and reside in, with a friend who is not yet divorced. He is going to pay 1/2 the current value of the house, partially to me and partially to my mortgage company.
He believes that if he puts his half of the property in the name of an LLC that he has set up, that it is protected from being marital property. Is that true, and can it be set up as joint tenancy w/ right of survivorship? Also, what are the tax ramifications having half owned by an LLC? I want to be protected in case things don't work out. Given the situation, what is the best way to go?
2 Answers from Attorneys
Re: Joint Tenancy with a LLC
Your friend isn't going to avoid the marital property classification by trying to hide it in an LLC. His interest in the LLC is still marital property if it was acquired with earned income. Of course, if he can trace the funds used to acquire his interest in your property to a family inheritance or gift, then he won't have this problem.
If you add him or his LLC to your title as a joint tenant, you stand to lose all of your interest in the property if you predecease him, or in the case of the LLC, to whomever he might pass it on to. Not a good idea for you. You are better off taking title as tenants in common, so you can pass your share of the property to your heirs through your estate.
As for tax ramifications, you can still deduct your share of the interest and property taxes, and are potentially subject to capital gains tax upon sale on your share of the property.
Re: Joint Tenancy with a LLC
Other than certain tax benefits, which I will omit describing, there is no basis for your contemplated course of action. For several reasons you stand to loose more than you would gain.
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