Yes, that would be the idea. So, we collected the rent and paid the trash collector, cleaners, etc and then gave him the excess, along with a 1099. Then, he put the 1099 amount on his taxes, along with the expenses that we did not pay (mortgage, appreciation, repairs, etc). In the end, it is all a wash for me, and ends up the same for him as well. The bottom line will be the same in either case. I am just not sure of the "correct" way to do it. I have different rental property that is managed by a property manager. He collects my rent and pays for incidental repairs for me and about 500 other property owners. Does he really put all of that on his own taxes? It just doesn't seem practical. This is the same thing, except I am not charging anything. If I were, the PM fee would be added to my gross sales, I'm sure, but would ALL of the rent he collects go there as well? The rent that he collects is not "gross sales" for the PM business, it is just money that is handled on behalf of the client... I have received different answers on different forums, and my own tax guy seems a bit ambivalent as well.
