Taxes as a Landlord splitting with Financial Partner

[hstettl]

I own a home with my ex-partner. I live in the home and we rent a room out. We split the mortgage 50/50 but most of my ex-partner's portion is paid by the tenant's rent. How should we report this income? Am I technically a landlord as well or should my ex-partner claim all of the rental income?

[DianeW777]

Yes, you are both landlords for the room rental depending on your agreement. You can split everything 50-50, decide between you who will report the rental income and expenses. If only one of you actually receives all the rents, pays all the expenses then that person should report the rental room. The Lease should spell it out.

•  Income will be exactly what was received for rent in 2024.
• Expenses will be divided by the rental room percentage (room square feet/total square fee)

Once you arrive at the percentage, this will apply to all expenses that are for the entire house for the rental portion (real estate taxes, mortgage interest, utilities, home owners insurance, as examples). Any expenses directly for the room itself would be fully deductible as 'Miscellaneous or Other expenses'. TurboTax will walk you through this when you begin the entry.

• How do I enter my rental income and expenses?

You will also use this to tell TurboTax what percentage of the home is for the rental unit.  The rent must be at fair rental value (FRV).  This means exactly what you would charge a stranger if you were renting the room to anyone. If this is the case then say 'Yes' it was always rented at FRV. Do not include the land portion of the value of the home. This will be a rental asset vs an expense.

However, if this is a 'not-for-profit rental there are different rules and requirements for reporting it. Check to see the fair rental value (FRV) in your area a room rental.

The not-for-profit rental income is reported as follows and can be found in IRS Publication 527. 

Where to report. 

Report your not-for-profit rental income on Schedule 1 (Form 1040), line 8. If you itemize your deductions, include your mortgage interest and mortgage insurance premiums (if you use the property as your main home or second home), real estate taxes, and casualty losses from your not-for-profit rental activity when figuring the amount you can deduct on Schedule A.

Sign into your TurboTax account:

1. Click Tax Home  in the left panel
2. Click Wages & Income  > Review Income
3. Scroll down to Less Common Income. Click Show more
4. Start or Revisit Miscellaneous Income, 1099-A, 1099-C
5. Scroll to select  Other reportable income
6. Say Yes to Any Other Taxable Income?
7. Enter a description and amount

[hstettl]

Thank you for the great info!

If we decide for my ex-partner to claim all of the rental income, but we split the expenses and interest for the home, do I still report the expenses/interests on my taxes?

[RobertB4444]

Yes.  If you are going to split the expenses then you would enter fifty percent of them on your return and fifty percent on your ex-partner's return.  When it comes to putting rental income you will enter zero and they will enter the full rental amount.

@hstettl