Hi @Carl - I have exactly the same situation as described by the OP: shared ownership of rental property with my brother. The partnership 1065 return and K-1 presentation of rental income and expenses makes sense for all the reasons you describe in this comment.
One question: title to property is held in our names personally, so how should we record depreciation expense? Our CPA suggested recording depreciation on 1040 Sch. E (50% for each partner), and to charge our partnership fair market rent for the property (also reported on 1040 Sch. E) which it will then “sublease” to the end-tenant. This way rent to end-tenant and operating expenses of the property will be presented on 1065 form 8825 and allocated to each partner via K-1s, but depreciation expense will be handled on 1040s as the property is owned by the individual partners and not the partnership.
Do you agree with this approach? I’ve noticed in your prior posts a strong bias for simplicity which I appreciate.
