topic Rental Income/Taxes in Investors & landlords

Rental Income/Taxes

obesemuffins — Fri, 01 Nov 2019 02:12:57 GMT

If my name is on the title and mortgage; however, I don't pay the monthly mortgage. Can the person who has been collecting the rental checks and paying the mortgage report the rental income on their taxes?

Re: Rental Income/Taxes

soultax09 — Fri, 01 Nov 2019 05:22:45 GMT

yes but what about the other rental expenses and depreciation?

Re: Rental Income/Taxes

Anonymous — Fri, 01 Nov 2019 07:09:30 GMT

everything id OK if this other person is on title. they can report all income and expenses

if this person is not on the title and/or mortgage, you have a tax issue. you should be reporting the rental income, expenses other than mortgage interest and depreciation. in addition, you may have missed filing gift tax returns if, the rental income exceeded $15,000 for the year.

as to mortgage interest, "The legal owner of the property that has been used as collateral to secure the mortgage for the property and makes the payments would be the only one that can legally take the deduction".

so if this other person, is not on the title, this person is not entitled to the deduction for the mortgage interest but you may be able to.

Re: Rental Income/Taxes

Carl — Fri, 01 Nov 2019 14:52:13 GMT

The rental income/expenses is reported by the one who actually receives the income and pays the expenses. The mortgage interest is only deductible by the person(s) who are legally obligated to pay it. So regardless of who paid the mortgage interest, the person(s) legally obligated to pay are is/are the one(s) who claim it.

Now the term "legally obligated" can be a bit mushy at times. If the person who pays it is not on the title or mortgage, but they can prove a "vested interest" in the property, they can claim the mortgage interest. But if audited on it they will need to be able to prove a vested interest. If they can't, then *you* the owner will need to file SCH E to report all the rental income and expenses, as well as claim the mortgage. Then any monies left over (of which there will not be one single penny left over) is "gifted" to the actual recipient of the rental income.

Re: Rental Income/Taxes

obesemuffins — Fri, 01 Nov 2019 17:37:31 GMT

So what I'm gathering from my question is a "yes?" I am merely on the title and mortgage. I have no other interaction with the property. I do not pay any expenses on the property. The other person is the one pays the expenses, monthly mortgage, in addition to collecting the monthly rental income. In this case, this person can report the rental income on their taxes?

Re: Rental Income/Taxes

obesemuffins — Fri, 01 Nov 2019 17:39:27 GMT

I do not pay any expenses on the property nor claim any depreciation.

Re: Rental Income/Taxes

Critter — Fri, 01 Nov 2019 19:58:52 GMT

You have a real mess on your hands ...

You as the owner of the property are allowing someone else to rent out your property and I bet you did not alert the insurance company of this fact ... so if you get sued you are in deep dodo. And if the property had a mortgage on it as a personal residence and you converted it to a rental then you may also be in violation of your contract. Also you have no income to report and thus no deductions to take on a Sch E.

This other person on the other hand has Sch E income to report however he cannot deduct the mortgage interest or taxes that he pays and he cannot take depreciation either. Other expenses like insurance, HOA fees and utilities are also not allowed since he is not liable for these items as his name is not on the bills.

I highly suggest you seek local professional assistance to get this sorted out.

Re: Rental Income/Taxes

TomD8 — Sat, 02 Nov 2019 14:06:38 GMT

<<The other person is the one pays the expenses, monthly mortgage, in addition to collecting the monthly rental income.>>

Is the other person "collecting" the rental income for themselves, or for some other person or entity? If it is for themselves, they must report it on their tax return.

Also, the "other person" cannot claim the mortgage interest deduction for someone else's debt unless they are a legal owner of the property.