Help with a 1099 misc. For rental income.

[sephjoe5150]

My boyfriend had a home with his ex wife. She lived in the home, until March of last year. Where at that point, they rented it out through a property management place. Per the divorce he is to claim the house the odd years. He received a 1099 misc. For almost 18,000. The money that was received for rent went straight to the mortgage company, because the home is not paid for. Some months the money didn't even cover the mortgage and we paid the difference. Is there anything I can do, to show that there was absolutely no money being made, it was only used to pay the payment, lawn, pool, upkeep, ext. Because when I put the 1099 in, it killed him on taxes. Please help!!!

[Hal_Al · Accepted solution]

The rental income is fully reportable. But the expenses, including mortgage interest and depreciation are fully deductible. When you get done, you will have a deductible loss, not taxable income.

Enter the 1099-Misc at the 1099-Misc screen. Later you will enter the expenses at:

- Federal Taxes tab (Personal in  Home & Business)

 - Wages & Income

Scroll down to:

-Rentals & Royalties

 “Per the divorce he is to claim the house the odd years”. What does that mean? Was that referring to back when it was her home and they were only claiming interest and tax deductions? If they are equal co-owners, they each should be filing a schedule E, reporting half the income and half the expenses (and claiming half the loss). Who is handling the money, the rental management co.? Will they put the 1099-Misc in her name next year? It sounds like you may need to lawyers involved again.

This will get complicated when the home is sold, as depreciation must be "recaptured". Speaking of the home being sold; there is a tax advantage to selling a home within three years of moving out (assuming one of them lived in it at least 2 years).