Does the mortgage of a rental property owned by an LLC go on the Balance Sheet (Sch L), when the mortgage is in the name of the married partners (not the LLC)?

[lw06880]

If not, where is the liability entered?  Is it in a capital account?

[sjrcpa]

If the mortgage is in the owners' names. is the real estate, too?

[lw06880]

No, house was bought by the LLC, so asset belongs on Sch L (over $1m). Mortgage is in partners names (married couple). Just don't know how to show the liability?  TY

[TaxGuyBill]

The LLC doesn't have a mortgage. 

Did the LLC members contribute the money to the Partnership (capital contribution), or did they make a loan to the Partnership (loan from partner)?

[lw06880]

Officially neither, this is a new venture for them.  Technically they set up an LLC and the LLC bought the house.  They personally made a down payment, got the mortgage and they are paying the principal/interest payments.  Is all of the liability their capital contribution? TY

[TaxGuyBill]

Just to confirm, this is a Multi-Member LLC, right?

The clients need to realize that the Multi-Member LLC is a separate entity (which is largely the purpose of an LLC).  Do they expect the LLC to repay them, or are the contributing to the LLC as business owners?

[lw06880]

Yes two members, husband and wife (50/50), filing a late initial 1065 for 2021.  No income in 2021, just interest payments, property tax, insurance and the asset/house itself. They will have made profit in 2022.  

So the mortgage should be a capital contribution not a liability?

[TaxGuyBill]

That is not for you to decide.  You need to ASK the clients about what they intended.

[qbteachmt]

"No income in 2021"

Why not? Was the property available for rent, or being fixed?

[lw06880]

Only bought in October. More of a summer rental destination