I should have clarified that "our" is my husband and myself, so we count as one.
Not per the IRS. "Our" is completely different from "me' or "I". If you do not live in a community property state, and both of you own a multi-member LLC, then you have no choice but to complete and file a 1065-Multi-member LLC/Partnership return.
If you do live in a community property state, then you can file the 1065, issue the K-1's and the related rental data will still end up on page 2 of the SCH E that is a part of your joint 1040 personal tax return. Or you can just report the income on SCH E from the get go, and there is no need to enter separate entries for each of you if you are married and filing a joint return. The SCH E section provides the option to identify that owner as either one of you, or both of you together.
there is no mortgage. Does that change anything?
Other than the fact you will enter either nothing or zeros for mortgage interest, it changes nothing. Either way you go, the end result still gets reported on SCH E as a part of your personal joint 1040 tax return.
Also be aware that it is most common for rental property to operate and every increasing losses each and every year, and those losses just get carried forward. In a case where you don't have a mortgage and thus no mortgage interest deduction to claim, it's perfectly possible to actually show a taxable profit. The major factor on weather it operates at a loss or gain would be dependent on the amount of depreciation you're required to take.
