Lots of tax questions

[Jessica B.]

I'm still pretty new to land-lording. In my current situation I've invested in a few rentals in Ohio. I, however, live in another state. I would like to do things right and at the same time not create more work than necessary. So currently, my wonderful aunt fixes up and manages the properties for me. In exchange she should get half the profit. So far majority of the rents have gone right back into the properties. This year, however, we've made some money. Here are my questions. When I go to pay my taxes do I just claim my half as income? We do not have any legal docs explaining this arrangement, everything is in my name except for our bank account, is that okay? If I explain this to my CPA will it be something he can work with? If I put the properties into my llc does this help matters? Do I pay ohio income taxes? Thanks for any advice.

[Steve Babiak]

You count ALL rents received (including things like application fees and late fees) as income. You then get deductions for expenses.

Sounds like your aunt is NOT a part owner. If that is so, then your aunt is acting as your property manager and you would compensate for that activity. If payment is above $600 in any calendar year, you would issue a 1099-MISC to your aunt showing the amount paid over the year. Then you get that property management amount as an expense.

If your aunt IS a part owner, then you have a partnership as @Steven Hamilton II already described.