Legal Question in Wills and Trusts in New York

Re: Limited Partnerships

In theory, the LP becomes the owner, must pay the bills and gets the deductions. You report your share of the net profit/loss from the LP in your personal return on Schedule "E". Presuming the LP will show a loss (rents less expenses, including taxes, insurance, etc.), this would be the equivalent of direct deduction. Alternatively, as the owner of the property, the LP could have a lease with you specifying that you pay certain items, like taxes. This might allow you to take the deduction as an itemized deduction rather than going through the LP return. The proper way is to pay rent, have the LP calculate its net income or loss, and report your share of the net as a LP distribution.