How to depreciate?

[AccTaxMan]

Taxpayer co-owns a property with her boyfriend. She is the one who takes all the rental income and pays all the rental expenses. So she wants 100% of the rental activity to be reported in her tax return. Is there any problem with it?

As for the depreciation of the rental property, does she only claim 50% of it since she is only a 50% owner? Or does she claim 100% of it since she is reporting 100% of the rental activity?

[MAMalody]

For the few co-owned properties I have dealt with, I have reported the income, expenses and depreciation per the ownership percentage.

[mastertaxguy]

co owned property: is it really a partnership?

Could this situation really be a partnership?

[Burke]

Taxpayer co-owns a property with her boyfriend. She is the one who takes all the rental income and pays all the rental expenses. So she wants 100% of the rental activity to be reported in her tax return. Is there any problem with it?

As for the depreciation of the rental property, does she only claim 50% of it since she is only a 50% owner? Or does she claim 100% of it since she is reporting 100% of the rental activity?

Sorry. If it is 50% ownership, then the Sche E is 50% for income and expenses (including depreciation). You input the ownership percentage and the software does the rest.

[Kram BergGold]

Another Way to View This

Let's say the rnet is $12,000 and as a coincidence all out of pocket, deductible expenses came to $12,000. Then the rents which each is entitled to comes to $6,000 per person and is used to pay the expenses so each reports $6,000 of income and expense. My point is, even though she got all the money that which is used to pay expenses would clearly be deemed to be shared by each of them. If the income exceeded expenses and she kept the overage then maybe you argue she pays tax on it. If expenses exceed income and she pays the extra then I would allow her to deduct the extra as well as her 1/2 paid with the rents. And I would say you can't depreciate that which you do not own.

[Gary2]

A different way to view this

A different view:

A and B are an unmarried couple, A is in the 39.6% bracket, B is in the 15% bracket. A pays 80% of the down payment, the monthly mortgage payments and other expenses are covered by rent, leaving a net profit. Since B clearly needs the money more, A allows B to keep it. To make it look good, the rents goes into an account in B's name, and that account is used for all the expenses.

Do you see a problem with allowing B to claim all the income, paying 15% tax, while A avoids both the regular tax and the NIIT?