Inherit Family property

[Bolilump]

How should I file an inherited family property that my sister live in & pays only the mortgage payment to the bank. I receive no money from her. She has bad credit to obtain ownership.

[Irene2805]

You can treat  the property as a rental property if you are now the sole owner of the property.  If you own it with your sister, then treat one-half of it as a rental property since she is, in effect, renting your half.

TurboTax CD/Download

To report your rental income and expenses in TurboTax Home & Business, please follow these steps:

1. Click on Business > Continue > I'll choose what I work on
2. In the Rental Properties and Royalties section click on the Start/Update box.
3. On the Income from Rentals or Royalty Property You Own  screen, click Yes.
4. If you have already started adding information about your rental, you will come to the Rental and Royalty Summary screen.  Click on the Edit box next to the property. 
5. If you haven't yet entered rental/royalty information, continue through the screens, entering the requested information.
6. You will come to the screen, Review Your [property address] Rental Summary. 
7. Click on Start/Update in the Rental Income section.  Continue through the screens to enter the income.
8. When you have finished entering the income, you will be brought back to the Review Your [property address] Rental Summary so you can enter other categories such as expenses, vehicle expenses, depreciation, etc.

TurboTax Online

If you are using the online version you will need TurboTax Premier or Self-Employed.  To enter the rental on Schedule E in TurboTax Premier Online, please follow these steps:

1. Click on Federal  > Wages & Income 
2. In the Rentals, Royalties and Farm Royalties section click on the Start/Update box next to Rental Properties and Royalties (Sch E). 
3. On the Income from Rentals or Royalty Property You Own  screen, click Yes.
4. If you have already started adding information about your rental, you will come to the Rental and Royalty Summary screen.  Click on the Edit box next to the property. 
5. If you haven't yet entered rental/royalty information, continue through the screens, entering the requested information.
6. You will come to the screen, Review Your [property address] Rental Summary. 
7. Click on Start/Update in the Rental Income section.  Continue through the screens to enter the income.
8. When you have finished entering the income, you will be brought back to the Review Your [property address] Rental Summary so you can enter other categories such as expenses, vehicle expenses, depreciation, etc.

[Bolilump]

1.   What is my best option(s)?  

2.   As rental property that receive no profit, up until this years I was paying the taxes & insurance, how can I file as a no profit rental? Or is this an option? 

3.  I don't what this property to cost me higher income that up my tax rate.

Plz help, Bobby

[ColeenD3]

You can treat it as a Not-For-Profit rental. You will need to report the amount she pays mortgage as income but you can deduct the mortgage interest on Schedule A along with the property taxes. It is better is she pays you directly and you pay the mortgage. In this case, it is your second home.

[Carl]

How should I file an inherited family property that my sister live in & pays only the mortgage payment to the bank. I receive no money from her. She has bad credit to obtain ownership.

I have no idea where folks are coming up with this "rental property" stuff. This is not rental property in any way, shape, form or fashion.

You have made it quite clear that both you and your sister inherited the property. Just because she was unable to qualify with you for the loan means absolutely nothing and is totally and completely irrelevant. Your sister owns 50% of the property and you own 50% of the property. Which of you makes the mortgage payment doesn't change that either.

It's basically a 2nd home for you, and the primary residence of your sister. Since your sister has a vested interest in the property (it's her primary residence. You just can't get more "vested" than that) and she is the one making the mortgage payment, she can claim the mortgage interest on her tax return. I would assume the mortgage payment includes an escrow amount for property taxes and insurance. Therefore you don't report jack squat concerning this on y our tax return. Your sister reports it all, since she pays it all.

Her "vested interest" is the fact that if the mortgage payment is not made, then the bank with foreclose and throw *HER* to the curb - not you. (Even though it's your credit that will be in the crapper)

In order for your sister to claim the mortgage interest, property tax and insurance, any two of the below three criteria must be met.

- She must be legally obligated to pay it.

- She must actually pay it. (acording to you, she does)

- She must have a vested interest in the property. (she does, because if it's not paid, she ends up on the curb.)

Note that while her name may not be on the mortgage, that doesn't mean her name is not on the deed of ownership. It very will could be and if inherited, most definitely should be.

There is also the possibility (though based on the wording of the post, I doubt it) that you sold her your half or she sold you her half of the inheritance. But I see absolutely no evidence or indication of that thus far.