Question

Corey and his wife are living in LV, Nevada and own an apartment house from which they receive $20K a year in net rental income. The wife also owns an apartment, which she had purchased as an investment while she was working before their marriage. The net rental income from this building is $15K a year. If the Coreys file separate returns what would each file for rental income on their tax returns?

Answer 1

Corey would report $10,000 if they split the income evenly, or the appropriate portion of the $20,000 based on their arrangement and his wife would report the full $15,000 from her separately owned property on their individual tax returns if they file separately.

Step-by-step explanation:

If Corey and his wife are living in Las Vegas Nevada and they file separate tax returns the rental income should be reported separately based on ownership. Corey would report the $20,000 a year in net rental income from the apartment house they own together. Since this is a jointly owned property and they choose to file separately, generally each spouse would report half of the income and expenses on their separate returns, unless a different division is agreed upon and can be substantiated. His wife would report the $15,000 a year in net rental income from the apartment she had purchased before their marriage, as it is her separate property.