USA Triplex with 2 owners with 1 unit occupied by 1 owner

[piripipayan]

So my brother and I bought a triplex last year, with me owning an undivided 2/3 interest and my brother 1/3. We were splitting the aggregated rental income and expenses just fine but now I've moved into one of the units. I proposed that because 1/3 is now owner-occupied I would not be paying rent, but that we would split income and expenses (that is solely allocated to the rental units) 50/50 on the other 2 rental units. Of course expenses such as home insurance and property taxes would still be split into 3 parts, with me paying 2 parts and my brother 1 part, same thing for other kinds of expenses that can't be allocated to a particular unit such as roof / sewer lateral repairs for example. My brother thinks that is not fair since he is supposed to own "1/3 undivided interest" and that we should continue to split everything into 3 parts and I should pay him 1/3 the fair market value rent. I told him if I paid him 1/3 the rent that he'll be on the hook for 1/3 of any expenses in my unit as well since I'll be a "tenant" to him. For example if my fridge broke and I go buy a new one he will have to pay 1/3 of it. I can't quite figure out which is the fairest option and hope someone can give us some guidance. Thank you!

 

[Steve-LevelUp]

In my opinion, treating yourself as a standard tenant is the fairest option. Charging him 1/3 all income and expenses is the fairest approach, even if it means that he pays for any uncertain expenses. If there are no unusual expenses, then he benefits from the rent, but if you have a major expense, then you benefit from him paying 1/3. Additionally, if you move out and another tenant moves in, there is no real change to his income or risk profile.