If there are 3 owners of the property, then a partnership has been created unless another type of entity was selected. Each partner is entitled to his/her own % of share of partnership income, deductions, etc.
Since it was a partnership, then Form 1065 should be filed each and every year, Form 8825 is used to report the rental income and deductions and k-1s created for each individual owner from the end result to carry to their own individual income tax return. None of the individual partners are entitled to claim the rental income or expenses or use the properties for free since they belong to a business entity and are business assets.
IRS Instructions for Form 1065
Publication 541, Partnerships
My recommendation is to go back and amend your individual return prepared incorrectly in the first year of ownership and each year since.
Unfortunately, the IRC does not allow a partnership to divide up the deductions and income anyway they want, there are guidelines to be followed.
When your son is living in the house, then he should either pay fair market value rent or consider the value of the housing he is receiving is a cash/property distribution on his k-1. When the 2 bedrooms get rented, then the 1065 return will show rental income in proportion to the space being rented as income.
Please refer to the following link for additional information:
