inheritance

Forum|Forum|4 years ago
March 25, 2022
2 replies
2 views

Hello,

My sister and I inherited our parents home, which we still own. Also, we inherited a trailer park. The property produces monthly income. We are not sure how to report any of this. What is reported and how? Do we split the income or how does this work?

thank you,

Becky

Anonymous_

Level 15

You might want to consider consulting with local legal counsel and/or a tax professional for this scenario.

See https://www.avvo.com/business-lawyer.html

Provided the home you inherited from your parents is being held for personal use (i.e., not rental use), there is nothing to report beyond, possibly, your shares of the property taxes and any mortgage interest.

If the trailer park is actually a business, then you might want to consider forming a partnership (this may already be a de facto partnership), LLC, S corporation, or other entity for liability purposes, income tax reporting, etc.

A local professional can provide guidance with respect to the various procedures, obligations, licensure required, et al.

Cynthiad66

Level 14

Since you jointly own the property you will claim one half. The form actually ask that question and will do the calculation for you.

Note: Land can never be depreciated. Since land cannot be depreciated, you need to allocate the original purchase price between land and building/hookups etc. You can use the property tax assessor's values to compute a ratio of the value of the land to the building.

To enter your rental:

Open or continue your return, if you haven’t already
Locate the Search bar in the upper right of your screen. Search for rentals and select the Jump to link at the top of the search results
Answer Yes to the question Did you have any income from rentals or royalties?
On the next screen, What are you here to report?, select Rentals and Continue
- If you have more than one rental property to report, no problem—just start with one, and we’ll come back to the other one(s) later
On the following screens, we'll ask you to enter all the info we need about your rental property, including: a description of the property, your rental income, any expenses and assets, and other less common situations about your rental
When you reach the Here’s your rental property info screen, double-check the info you entered to make sure everything is accurate and that you haven’t left anything out
Once you’ve entered all your info, you’ll be taken to the Your income screen
- If you have more rentals to enter, scroll down to Rental Properties and Royalty Income (Sch E) and select Edit/Add next to this line
- On the Your 2021 rentals and royalties summary screen, select Add another rental or royalty
- From here, follow these instructions again, starting with Step 3, and repeat until you’ve entered all your rental income

Tip: Rent is considered income in the year you received it, not the year it applies to. This means that a rent payment for the month of January 2022 collected in December 2021 is reported on your 2021 return.

Click here for more information

@Bev111

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Anonymous_

Level 15

@Cynthiad66 wrote:
Since land cannot be depreciated, you need to allocate the original purchase price between land and building/hookups etc.

There is no indication that this is rental real estate (for the purposes of tax reporting) rather than a business and the treatment of each would be markedly different.

Further, there is no "purchase price" since @Bev111 clearly indicated that the trailer park was inherited; the basis would typically be the fair market value on the date of death of the decedent(s).

@Bev111 and the sister need professional guidance for this matter.