My wife and I are contemplating an investment with my daughter and her spouse. They currently own a home in Texas that would be a great rental. They need to move to another part of Texas for work related reasons. Can we pay them to become co-owners in the current house and then be able to report our share of rental income, expenses and depreciation in TurboTax without being added to the deed or mortgage?
My daughter and her spouse need some of the equity from the current home that they have lived in for more than two years to purchase their new home. If we buy into the proposed rental property, they will have the down payment they need to purchase a new home and we all can benefit long term from a rental that is cash flow positive and likely to appreciate significantly over time. We also both benefit from the current attractive interest rate they have on their mortgage (~ 70% of the home's current value) so we prefer not to go through the hassle and expense of formally getting added to the title.
My wife and I remain in the original area so can help with routine maintenance, meeting prospective renters, etc. Our daughter and her spouse have excellent careers and we have a great relationships so we are not worried about risks related to future financial struggles, family squabbles, etc.
If we can't report rental income, expenses, etc. without being on the property deed, then an alternative might be to structure this as us investing in their rental property operation? In that scenario, they would report rental income, expenses and depreciation on their tax returns and we would receive a return from them on our investment. If we paid them a lump sum investment amount up front:
- How would we report our initial investment in TurboTax?
- How would we report revenues or additional investments from our share of rental income and expenses?
- How would we report our share of the proceeds when the rental property is sold?
- Similarly, how would my daughter and her spouse report the up front investment from us and their payouts to us for our share of profits?
Search Terms: report rental income and expenses in TurboTax without owning property; investing in rental property operation without being on the property deed
