Why not form an LLC or limited partnership instead of a tenancy in common?
Limited liability companies (“LLCs”), limited partnerships, and corporations are entities that can provide a variety of management and liability protection advantages over direct fractional ownership arrangements such as tenancy in common. But for co-ownership groups who plan to occupy some or all of the co-owned property, the legal and tax disadvantages created by these entity structures generally outweigh the benefits. Specifically, under generally accepted interpretations of tax laws, owners of LLC memberships, limited partnership interests or corporate shares are not considered to own real estate (unless the entity qualifies as a stock cooperative), and therefore cannot claim the tax benefits of real estate owner-occupants such as the ability to deduct mortgage interest and property tax, and the ability to claim the $250,000/500,000 tax-free gain on resale. If the LLC, limited partnership or corporation can be deemed a stock cooperative, it is likely to encounter regulatory barrier
