Entering income (loss) from co ownership in property syndicate

Tax Topics
1

Hi there fellow tax peeps. I’ve been blessed to not have to bother you as much this year…Alas, it’s always in the last week that the “never before seen to me” things appear!!
I have a client that is a co-owner in a property investment. I was told that “any income she receives from it is fully taxable as there’s nothing to write off against it”
I have just received the financial statements. I was originally looking at it like it was a business…but, I’m guessing that it’s treated just like any other investment.
Client is not actively involved in the management, capital went in and incomes are paid out?? On one of the statements she is showing her “share of net income”. Should I enter this on Investment (S4) worksheet in Part III (Net partnership income (loss) : Limited or non active partners??

Thanks so much

2

Essentially yes assuming she’s a “limited partner”. This would be reported on a T5013 form if there were enough partners (sounds like there isn’t) but every year you adjust the cost of the investment by increasing for reported business profits or deducting for reported business losses and reducing by any cash paid out which may be more or less than the reported profit for the year. I would think however that a “co-owner” would report it all on the T2125 form then report their half at the bottom much like rental properties co-owned by husband and wives however as only two partners are not likely to be “limited partners”. Could be though if she is a silent partner I suppose.

3

Thank you so much for those details Laurie. There are 65 co-owners listed on the statement…so not enough for a T5013? It appears to be just “static” ownership of a chunk of property in one location…not like a fund that is buying and selling numerous properties, if that makes a difference.
Kindest regards,

4

I am fairly sure that T5013’s have to be issued if there are (at least?) 5 partners? Something seems a bit off about this.

5

Ok, thanks so much Laurie

6

Smells like someone put together a deal without knowing how to put together a deal? :slight_smile:

7

haha, it definitely feels like something is missing.
BDO did a T2125 but we don’t feel it belongs there. Since rec’d confirmation that it is absolutely a passive investment and they just send out Financial statements for tax reporting. Should be “some” kind of slip…T5013 sounds logical.