Yes, your daughter would report all rents received from the room rental and would enter rental income on her tax return. For tax purposes one third of the cost of the condo would be her asset for depreciation since she is one third owner, however continue to see additional information about the potential 80/20 breakdown.
Home equity share agreement definition (80/20 applies only to this agreement).
One (your daughter in this case) receives an equity advance in the form of a lump sum cash payment from an investment person (you as parent in this scenario). In exchange, one will give the investment person the right to a portion of your home's future fair market value (FMV). The agreement can be voided at any time.
Future would not affect your portion of a sale, since only she would depreciate her share of the property. At a future sale, she would be required to recapture depreciation on her portion of the sale if there is a gain.
You should check with an attorney to see how the home equity share agreement might apply to the actual ownership of the home. If you have documents that show legally that your daughter actually owns 80% of the condo, then she could use that instead of the 33% based strictly on the deed. And yes, she will use the square feet of the room against 33% or 80% of the total condo square feet, depending on the legal documents, to arrive at the business use percentage of the condo and all expenses related to the rental of the room.
This will be easy as far as setting up the assets, and then the expenses would need to be manually broken down by the amount your daughter actually pays, less any reimbursement from you, times the business use percentage to expense against the room rental income.
@stewartmorse03
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