Rental Property/Multiple Owners

[JCH]

I've received the question from a colleague, and I wonder if I'm missing something. He's claiming that a rental property can have multiple owners, and the owner's can report their share of income and expenses on Schedule E on their individual 1040's.

I've always thought that with multiple owners, a partnership return should be filed, and the members get a K-1, but maybe I'm missing something. Anyone have any thoughts on this? Thanks.

[solomon]

I agree with your colleague - assuming no entity has been formed.

[Gene V]

I agree with your colleague - assuming no entity has been formed.

I also agree, From TTB 7-4

Part I. Use Part I, Schedule E to report the following:
• Income and expenses from rental real estate. Individuals who
own a part interest in a rental real estate property report only
their part of the income and expenses on Schedule E.

[Roland Slugg]

I also agree with your colleague. In fact it would be improper to file a partnership return in the situation described. The instructions for F-1065 make that very clear.

[erchess]

Could

two or more people form a partnership that would own one or more rental properties?

[taxea]

If I remember right having a rental property does not constitute a business. This is why it is reported on Sch E and not Sch C. As long as the deed and mortgage lender lists all owners allocating income and expense by % of ownership is correct. taxea

[JCH]

Form 8825

I also agree with your colleague. In fact it would be improper to file a partnership return in the situation described. The instructions for F-1065 make that very clear.

Roland, I'm not following. Isn't Form 8825 designed to handle rental property held in a partnership? Can you elaborate? Thanks.

[taxea]

Partnerships are entities that are formed to conduct a business. A rental is not a business just because there is more than one owner. taxea