No, is the brief answer. Generally, each of you would report your proportional share of the rent income and rent expenses on your individual income tax returns.
However, a written agreement may have a different % allocation [ownership basis is not affected] if one co-tenant owner does not wish to actively participate in the selection of tenants and managing the property. A written agreement is also helpful if ever audited.
Although individual state laws may differ, as far as your federal return goes, the rent could be shared in varying proportions calculated to produce the maximum tax advantage for each owner, especially if one owner is a higher rate taxpayer and the other a non- or basic rate taxpayer.
See Rev. Rul. 71-268 long as the person paying the interest and taxes has an ownership interest in the property then that person can deduct the full amount paid. This is the case for the second owner in your question. They can claim the mortgage and taxes but definitely NOT ON THEIR SCHEDULE A. This must be entered on the Schedule E.
The rule when it comes to mortgage/home equity interest and property taxes is that 1) you must be obligated to pay the interest/taxes, and 2) you must have actually paid them.
If you are joint owners of the property, and you have taken out a mortgage/home equity loan against the property, and you make the payments, then you are entitled to take the deduction for the interest. If you are joint owners of the property, then you are both obligated to pay the taxes, and if they are the one who actually pays the taxes, then they are entitled to the deduction for the taxes.
If both of you split the payments for the mortgage and taxes, then you are each entitled to take deductions for a proportional share of those expenses, assuming again, that you are both equally obligated to make the payments.
Much of this answer is credited to maglib (SuperUser)
