topic In a co-owned rental property but one party pays for all mortgage, who should report income and take tax deductions? in Investors & landlords

In a co-owned rental property but one party pays for all mortgage, who should report income and take tax deductions?

CK1 — Sat, 01 Jun 2019 00:29:56 GMT

I co-own a rental property (single family home) with my mom. She pays all the mortgage and receives all rental income.

1) I don't need to report a % of income on my return and

2) She can claim the mortgage deductions?

Is this correct?

When two or more people hold property jointly on a deed,...

view2 — Sat, 01 Jun 2019 00:29:57 GMT

When two or more people hold property jointly on a deed, generally it is an concurrent estate.In concurrent estates, one party may be able to rent the property without the other party's knowledge, both will generally have the right to share in the rent income. However, the parties' rights may depend on the individual's mitigating circumstance.

Generally each of you would report your proportional share of the rent income and rent expenses on your individual income tax returns.

However a written agreement may have a different % allocation [ownership basis is not effected] if one co-tenant owner does not wish to actively participate in selection of tenants and managing the property.

A written agreement is also helpful if ever audited.

Thank you. Sorry, I should have mentioned that we both d...

CK1 — Sat, 01 Jun 2019 00:29:58 GMT

Thank you. Sorry, I should have mentioned that we both do not live there and it is rented out to complete strangers. We are not co-tenants.

1) She also fully actively manages the property. I pay her a 10% management fee. This can still be considered an expense on my side and income for her, correct? She will have to pay the taxes on the management income at her tax bracket.

2) Since she also pays 100% of the mortgage, can she take the mortgage deductions?

Thank you

1. taxable income.Any fee paid by the co-ownership to a b...

view2 — Sat, 01 Jun 2019 00:30:00 GMT

1. taxable income.Any fee paid by the co-ownership to a broker must be comparable to fees paid by unrelated parties to brokers for similar services.

2.A person can deduct mortgage interest if they own the property and are liable for the debt and make the payments.

Under § 1.761-1(a) and §§ 301.7701-1 through 301.7701-3, a federal tax partnership does not include mere co-ownership of property where the owners’ activities are limited to keeping the property maintained, in repair, rented or leased.