I co-own a 4 unit property with my daughter. We are equal owners of the building (50/50). I live in one unit which is 1,845 square feet (41%) of the total building area of 4,522 square feet. My daughter has a hair salon in one of the units which is 1,064 square feet (24%) of the building area. The other two units, 756 (17%) square feet and 857 (19%) square feet, are rented to tenants. I also have a home office in my unit (24%) of the 1,845 square feet, and my daughter's entire unit is her hair salon-it is a business she is the owner of-it is not a residential unit.
How do we calculate the expenses? Items such as snowplowing, lawn care, property insurance, trash removal, etc. benefit the entire property. Mortgage interest obviously is for the entire building. Each unit has its own metered water and sewer which the tenant is responsible for. Each unit has its own heat system and electrical meters which the tenant is responsible for. I am not sure if we just split the rent and expenses and overall depreciation equally, or remove our ownership percent and split the the rent from the tenants and the percentage of the building attributed to the tenants. In that case, do we lose the depreciation that would be allocated to my unit and to her unit?
The value of the structure (not including the land) is approximately $200,000.
Since I live in one of the units can, or should, my daughter charge me rent, and can, or should, I charge her rent? We do both contribute to the cost of the mortgage and taxes and insurance beyond what the rental income does not cover.
Any information or thought would be appreciated. Thank you.
