Yes, the first part of your answer is correct. You will modify the percentage change each year to properly reflect the fair share of your income and expenses for the year. Your daughter will do the same on her return. you would do the Schedule E the same as you did before. The program will allocate income and expenses according to your percentage you have listed.
The same with depreciation. The program will allocate depreciation according to your ownership percentage so this does not need to be manually adjusted in your return. Same for your daughters. As far as the title company, you will need to ask them if the ownership percentage need to be recorded on the title.
Your excise taxes and capital gains are reported when you sell the property. Your portion of your gains and excise taxes are determined by your ownership percentage in the business. One great advantage of Turbo Tax is that if you stay with Turbo Tax, all data will be maintained each year and when you finally sell the property, the calculation of capital gains and ordinary gains are correct. Also, Turbo Tax keeps an accurate record of depreciation used throughout the period of ownership.
One note I need to advise you on. Since you are gifting 1% of the share of the rental property and if the amount of the share is over $16,000, you will need to file a gift tax return for the gift, regardless of the fact that your daughter will make future payments toward the ownership of the property.
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