USA My sister and myself own a building, she gives me a check every month so I only send one mortgage payment every month

[chivy]

What category should I use?

That is not taxable!! Is that exchange? Thanks for your help!!

 

[Werner Reisacher]

Schools are teaching us the fundamental rules and regulations on how to solve problems that we will encounter in our future professional lives. And they test our understanding of the rules by giving us clearly identified problems that need to be solved. Once we work in the "real world" we have to get used to that nobody is identifying problems that need to be fixed. We must find out by ourselves whether there are issues that must be addressed.
In your case, you have legal, cash flow, and accounting problems involved.
- In who's name is the building registered? (ownership)
- Is the building rental or a primary residence. If the latter, who is living in it? Both, you and your sister or just one?
- Who is responsible for the mortgage liability?
- Are you both claiming mortgage interest as a tax-deductable item?
- If the mortgage interests qualify as tax-deductible interest for both of you, the monthly checks must be made payable directly to the lender and not via a third party.
- Who is the lender? (qualified mortgage lender)

Once you addressed all these questions, you probably find your answer. Otherwise, please come back with a specific problem.
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[chivy]

the building is registered under both our names, we are both liable as we are on the loan together.
We both work on the building, each one claims 50% mortgage interest.

The lender is Wells Fargo, and they don't want 2 checks, they only want 1 check, that's why my sister gives me her portion every month.

I don't really know under what category should I classify this entry in QB. Can you please help me out?

Thanks!!

 

[Werner Reisacher]

Is the building a rental property or primary residence?
Who lives in the building?
What is the purpose of keeping books?
I am more concerned about the tax issues than the accounting transactions.

 

[chivy]

We work on the building. It is not our primary residence, nor is rented out.
We both have a different businesses, that's why we need to keep all our books.

 

[Werner Reisacher]

Understand now.
Let's assume you bought the building for $ 100 K ($ 50K)
Mortgage: $ 70 K
Monthly payments: $ 360 - ($ 100 Interest $ 260 principle)
Amortization over 27.5 Years (residential) if commercial 29 Years

Purchase of building: - Debit: Fixed Assets $ 100 Credit: Cash - $ 100K
Mortage received: Debit: Cash $ 70 K Credit: Bank Loan long term ($ 70 K)
Monthly payment Debit: Interest Exp. $ 100
Debit: Bank Loan $ 260
Credit: Bank $ 360
Monthly depreciation Debit: Depreciation (a profit and loss account/admin cost) $ 212
Credit: Accumulated Depreciation Fixed Assets $ 212
(a negative fixed asset account is shown in brackets underneath the asset in the Balance Sheet.

In order not to mingle your business with your personal money, I suggest that your sister pays her share to you by giving you a check to the order of our company and not your private account or set up a standard e-transfer directly into your business bank account just in case.
Feel free to come back if any issue remains unclear.

 

[chivy]

thank you soooooo much for your help!!
Stay healthy!!