This isn't true in the United States if the business is organized as an LLC which is definitely the most common way of handling residential real estate. I, like bigtunacan, am very curious about this part of the story. It doesn't really add up.
EDIT: thinking about this more I suppose that one possibility is that the operator brother is taking basically all of the rent as income and the financier brother, instead of making a return from rent, is hoping to make a return from appreciation (selling the houses later for a profit). TBH this doesn't seem super likely to me either, but it's possible.
I really don't think that the author is correctly explaining his tax situation (which is fine. it wasn't the main thrust of the post).
EDIT: thinking about this more I suppose that one possibility is that the operator brother is taking basically all of the rent as income and the financier brother, instead of making a return from rent, is hoping to make a return from appreciation (selling the houses later for a profit). TBH this doesn't seem super likely to me either, but it's possible.
I really don't think that the author is correctly explaining his tax situation (which is fine. it wasn't the main thrust of the post).