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CelloPlaya
Returning Member

Brother & Sister Inherent Rental Property - Need to create Partnership/LLC?

Our mother passed away in 2020 and she had a 2 unit rental property that transferred ownership to my sister and myself upon her passing.  

 

Do we need to create a Partnership or LLC entity and  file a Partnership/LLC return to generate K1s?

Or perhaps can we simply report 1/2 of the expenses/income on our respective Schedule E forms?

 

Thanks!

4 Replies
Mike9241
Level 15

Brother & Sister Inherent Rental Property - Need to create Partnership/LLC?

a partnership return is required. whether it's an LLC or not is a personal decision.  since it was due 3/15/2021, it is now late. your interests may be best served by using a pro to prepare the first year's return. while some non-husband/wife "partnerships" split reporting directly on their returns, this is not proper. a husband/wife who are the only partners can split reporting the income on their personal return as long as the partnership is not a state law entity, ie an LLC.  

Hal_Al
Level 15

Brother & Sister Inherent Rental Property - Need to create Partnership/LLC?

I'm of the opinion that you can report your share on your respective Schedule E.  Using a partnership is optional.

 

I'm in a similar situation, and we each report 50% on our Schedule E.

 

Some hastily obtained references:

https://pen.do/blog/filing-rental-income-property-tax/

https://ttlc.intuit.com/community/investments-and-rental-properties/discussion/my-father-and-i-co-ow...

https://pocketsense.com/taxes-joint-owners-rental-income-8555235.html

CelloPlaya
Returning Member

Brother & Sister Inherent Rental Property - Need to create Partnership/LLC?

Thanks Mike!

CelloPlaya
Returning Member

Brother & Sister Inherent Rental Property - Need to create Partnership/LLC?

Thanks Hal!

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