Rental Property Taxes for Co-Owners

[daryn-11]

I recently purchased a house with together with my father. he lives upstairs and we rent out the basement. The house is in Utah and I live in California.

When the time comes to filling my taxes, do I need to keep separate what I've spent in rental repairs/maintenance vs what my father has spent in rental repairs/maintenance? How are taxes filled for co-ownership of a rental property?

Also, I'm thinking on creating an LLC for the rental property, but I'm not sure if I'm required to do it in California or if it should be in Utah (I live in CA, my dad, who is a co-owner, lives in Utah where the house is)

Thank you!

[conniem123 · Accepted solution]

Hi daryn-11

Congratulations on the purchase of the home and rental!

Both you and your father will report the rental income received on your Schedule E of your tax return.  You will want to keep track of expenses paid separately, as you will each deduct the expenses you paid.  You also will each report 50% of the depreciation of the property for the portion that is a rental.

Here is a great IRS resource, https://www.irs.gov/pub/irs-pdf/p527.pdf

If you create an LLC for the property, that would be a partnership since two members and would require a partnership tax return.

I hope this information is helpful!

[daryn-11]

Thank you so much!