Rental Property split between three siblings

Do you pay rent to the other 2 siblings for the unit you are living in?

There are several ways to do this, I'm only going to cover the way I recommend.

The overall best way (my opinion) is to treat the rented unit "as if" it was it's own physically separate property. That means mortgage interest, property taxes and insurance along with depreciation would be split for the "personal use" unit and the rental unit. Then assuming utilities are metered separately for each unit, all other expenses that are 100% related only to the rented portion, would be 100% rental expense.

Since there are more than two owners, reporting this rental on a 1065 partnership return would make any future changes easy. With a partnership return, all rental property income/expenses/depreciation would be entered on one single 1065 tax return and each partner/owner would be issued a K-1 reflecting their share of income/expenses based on their percentage of ownership. That K-1 would be needed for each partner to complete their own personal 1040 tax return.

To complete a 1065 Parnership return would required the purchase of TurboTax Business (different from Home & Business). TurboTax Business is not available as an online product or for MACs. It's for the Windows operating system only.