Financing Costs - Inv Real Estate - Partnership

[duanecpa]

New Client - TP created a partnership. TP purchased rental real estate. TP transferred deed to the partnership of the real estate purchased by TP - however the mortgage is in the name of the TP. Normally the financing costs would be amortized over the term of the loan - are the financing costs to be amortized on the partnership return? or are they a personal expense since the mortgage is in the name of the TP and not in the name of the partnership.

Citations would be helpful.

Thank you.

[Bees Knees]

If the deed to real estate is contributed to a partnership in exchange for a partnership interest, that means the contributing partner no longer owns the real estate. You cannot deduct finance costs on something you do not own.

Have the mortgage transferred to the partnership and then have the partner personally guarantee the mortgage so that the mortgage company agrees to do so. Then have the partnership amortize the finance costs.

[Gretel]

I am a little bit puzzled on how the deed could be transferred to partnership no changing the mortgage and the bank not having any problems with this. Are you sure this is what happened?