Appreciate the answer, Amy.
My son owns half of the whole property, not Unit 1 where he lives with his finacee. It may be simpler to view the two units as condos and he owns unit 1 and my wife and I own unit 2, but that is not the reality.
My son pays "rent", or rather the couple pays rent. But that's just what we call it. He could write a check every month for half of the mortgage, half the utilities, half the insurance, half the taxes, and half the other stuff. That would be several hundred more per month that what he pays, or rather, what he contributes to the bank account for the property.
Just FYI, the two units are almost exactly the same size. Before we bought it the previous owner charged about the same for each unit.
So I guess what I should do is:
1. Ignore Unit 1 on his return.
2. Populate schedule E for only Unit 2 rent, expenses and depreciation.
Sound right?
