Inheriting Property - Nj

[Susan Gruhn]

Hi BP family,

Hope you can help.  I will be inheriting a townhouse in a nice neighborhood in NJ.  My son currently lives in the townhouse b/c he is going to school and works in the area.

Since he is young and starting out in life, I would like for him to only cover the basic costs (taxes, HOA, utilities) just enough for me to break even (I believe that will put him slightly little lower than market rent rates). There is no mortgage on the property. In the event that he moves out in a few years, I would turn the unit into a rental.

Questions:

1) Since I will be renting to a family member, do I still need to create an LLC? Does having an LLC make it easier to distinguish on a tax return that this is a rental property. Or can you still run everything through your personal return (just want to make sure that I can deduct things such as HOA fees which I can do if it is a rental).

2) If I do decide to run everything thru my personal tax return (save on LLC fees), should I at the least set up a separate bank account to track costs separately?

3) Can I rent to my son and also treat him as the property manager?  For example, if I send my son money for books, can I do so as a property manager fee so that this is also tax deductible.

4) If my son, finds the monthly payment to be to much while he is in school and I end up shouldering some of the costs, how long per IRS rules can I carry a loss on the property.

Any help would be greatly appreciated.

Thank you.