Rental Property Awarded After Divorce, How Does Each Party Claim the Income / Expenses of that Property on Taxes

[dcarbine]

My x-husband and I got divorced August 2022. I was awarded the Rental Property that We had owned together. When doing my individual taxes do I claim all of the income and expenses on that property or only 1/2 or a certain percentage? How do I handle this ? Thanks!

[DianeW777]

It depends.  If your divorce decree states any income allocation for the rental property during the period of the year you were married.  

If not, the rental can be reported by you for the entire year including all income and all the expenses for the year.  Continue the rental property as you have in the past as if only you have always owned it.  The cost basis remains with you since it now belongs fully to you due to the divorce.

• Where do I enter rental income and expenses?

[Carl]

do I claim all of the income and expenses on that property or only 1/2 or a certain percentage?

Depends. Did "you" actually receive all of the income for the rental property? Maybe you were awarded it for the entire year, or only from a specified date? Does your state law dictate? (Whatever state you may be in)

I would not recommend you guess on this, and seek the services of any attorney; maybe your divorce attorney assuming you actually hired one to facilitate your divorce proceedings? That's also assuming your divorce attorney knows anything about taxes and the such. I would not expect them to.

[dcarbine]

We are in Texas. My x-husband and I had a joint bank account that was only used for this rental property. We used the rent to cover the mortgage and any expenses on the property. My x-husband and I split what was in the account at the time of the divorce in August. I now manage the entire property with my own bank account. I read in Publication 504 the following: 

IF you transfer ...	THEN you ...	AND your spouse or former spouse ...	FOR more information, see ...
income-producing property (such as an interest in a business, rental property, stocks, or bonds)	include on your tax return any profit or loss, rental income or loss, dividends, or interest generated or derived from the property during the year until the property is transferred	reports any income or loss generated or derived after the property is transferred.

[maglib]

@dcarbine 

as @Carl  responded your divorce agreement and a discussion with your ex is needed.  you first need historic information on depreciable base of the property.  You enter exactly what was agreed to in the divorce agreement.  Based on your response then you have 50% till date of divorce then 100% from divorce date.  You really need to confirm how your ex is handling it too as he should have a disposition of the asset.

The biggest problem is how to enter in TT.  

You would enter the original assets at 50% of all history.  Then enter an additional asset for the other 50% for the date of divorce for each asset of that is what was agreed to in the divorce. you do not get any step up in basis in a divorce so be careful entering the proper history.  Best way to do this is to have the old electronic files and edit them.