North Myrtle Beach, SC asked in Tax Law for South Carolina

Q: I have rented my son's condo and I received 1099; now I have to provide this income as an owner, manager or trustee?

I live in SC and 10 years ago I had helped my son to buy an inexpensive condo near me.

Our family have used this condo occasionally when they had visited me. The condo is on my son's name, but I had managed it and paid all dues (there is no mortgage on it).

However, 2 years ago I moved further from the condo and to the larger house; so, there was no need to keep condo empty. I have decided to rent it using local management company. For the entire 2019 condo have generated rental income $21,000; of course I had some expenses related to renovation, HOA, insurance, property tax and repairs.

The management company had issued 1099 for my name using my SSN since my son is neither the US citizen nor he has any tax number in US; he is Canadian.

I want to include this rental income to my income tax as a trustee or manager and exclude my son. Can I subtract from this income the HOA, insurance and renovation? Do I have to depreciate it as my accountant said, even though I am not its owner?

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1 Lawyer Answer

A: It sounds like you rented the property, received the income, and received the 1099. You would report that income less expenses and depreciation on a Sch E.

Ownership is irrelevant; you're the one running the rental business and using the condo as a business asset. Your right to use the condo for business purposes is ill defined but it does exist.

This could be interpreted as your son running a business of leasing the condo to you and then you sub-lease to a tenant. This would create a requirement for him to file a non-resident return and generally speaking would be a giant headache. I'd need more facts to make a determination.

Your accountant is correct. List the 1099 income, list expenses, and depreciate the property on the Sch E.

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