Property Manager wants to issue a K-1 for a 1031 exchange property that has had Schedule E in past

[DeeJayKay]

I own a part of a rental property as a tenant in common (TIC)  that I got through a 1031 exchange (second property since the original 1031 was done in 2006). I have everything in Turbo Tax and have filed a Schedule E for the last two years (used a CPA before then). I received a note from the property manager saying "We are rolling several TIC members for our properties into the Limited Partnership this year which will enable you to receive a year end K-1 rather than having to track your tax filings separately." They have my depreciation schedule from last year. Will this create issues for me when I file my 2019 taxes? Will I have to reenter a lot of data from past years, or do anything to change how my Turbo tax account deals with it given it "knows" the property through Schedule E filings? It's my only investment property, it is owned by my revocable living trust, and I do not actively manage it.

Any help would be appreciated as I don't want to agree to something now and have it bite me from a paperwork or record-keeping perspective come April... Thanks.

[soultax09]

i wouldn't go along with that. you'll have to keep track of your outside and inside the LP basis.

[Carl]

It will bite you. Don't go along with it. Been there. Done that. Got the T-Shirt. It's a T-shirt you don't want.

[Critter]

Sounds like you were already in a partnership so the management company is now going to complete a partnership return  that should have been done in the first place.  If that is true then you will stop filing the separate Sch E  and only report the K1  ... I highly recommend you seek local professional guidance to review your situation.

[DeeJayKay]

Thanks - I'm not actually in the partnership - the manager formed a Limited Partnership for all the investors except those of us who came in via 1031 exchanges. Those of us who came in as 1031 exchanges were each considered a TIC and get different paperwork than all those in the Limited Partnership.

[DeeJayKay]

Thank you - my gut is that they want it to be easier for them, but there must have been a reason those of us who came in as 1031 / TIC originally couldn't be treated the same so I don't get why we are being pressured to change now. I sense it's better/easier for them but not necessarily for me.

[Critter]

There is probably much more to the story ... I suggest you see a local tax attorney to see what is allowed and/or what you can do about it.