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Cdk2023
Returning Member

Shared rental property

In August 2023 we(boyfriend and I) rented our home out to move in and assist my mom. I have a dependent and claim head of household. He claims single. Is it best to split the income and expenses for the rental 50/50 or would it be more beneficial(or easier)for him to claim the income and expenses? We still have a mortgage on it and had just purchased new appliances when my mom was diagnosed with dimentia. Or would it be more beneficial for me as head of household with one dependent? Legally is there a must divide and claim equally? We have a shared account for the rental. Thank you for any guidance.

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2 Replies
Carl
Level 15

Shared rental property

Assuming both parties are on the deed, and both parties are on the mortgage, rental income/expenses should be split. What you have is a partnership. You can split it manually on your individual personal tax returns. Or you can file a 1065 - Partnership return and each of you report the K-1 on your separate tax returns. I would recommend the latter, as it's easier to deal with all the splits. Just take note that the 1065 Partnership return is due by March 15, and the late filing fee for that is $205 for each month late, for each partner.
As for you filing HOH, if you've moved in with your mom, I question your ability to qualify for HOH. Most likely you will. Just make sure you work through that section of the program to confirm you do "in fact" qualify for HOH, as I would not expect you to be paying more than half the expenses of running a household that your mother owns - not you.

Shared rental property


@Carl wrote:

Or you can file a 1065 - Partnership return and each of you report the K-1 on your separate tax returns. I would recommend the latter, as it's easier to deal with all the splits.


Except the administrative burden is much more difficult, not to mention costly. 

 

Not only would a 1065 need to be prepared and filed (and K-1s issued) at the federal level, a state return may be required as well (depending upon the state). That would involve spending hundreds on a tax professional or at least a couple of hundred on DIY business income tax preparation software. 

 

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