Who is allowed to claim rental income?

Question

If an unmarried couple wants to buy or build a fourplex, should both of them be on the deed? Who would be allowed to claim the rental income? Let's say one spouse works and earns money, and the other spouse doesn't work or earn any money. They share children. Can the non working spouse claim all the rental income, even if they both would own the property? If not, can they put the property in just her name, while the working spouse cosigns for the loan?

What's a good way to structure this? An unmarried couple who have kids want to buy/build a fourplex, one spouse works and earns money, one spouse doesn't.

Ellie Narie · Answer

Not married officially, but living as married (and have kids). If a partnership agreement is drafted, would it be possible that only one person claims all the rental income? How complicated is it to draft this kind of agreement?

Ashish Acharya · Answer

@Ellie Narie ,

You asked about unmarried couple, but refer as " one spouse" and "other spouse".

Are you married or not? I asked because you might be filing  as "married filing separately" compared to both single filing "single returns".  Depending on which, the treatment is entirely different.

I am guessing you guys are single for tax purpose. if so, the rental income and expense are divided based on the ownership of the property.

You cannot just shift the income if another person also owns the property. It can be done but requires well-drafted partnership agreement if your business activity rises to the level of partnership. Just renting a property and sharing expenses might not be a partnership.

Yes, one can cosign the loan, and other can own the property. Whoever owns the property will report for tax.  There are exceptions but not required to mention here.