Schedule E it is!

@Daniel MadhavapallilYou should hire a tax professional. 

., mortgage interest, taxes, repairs, depreciation) on Schedule E starting when the property is placed in service.

If your friends have a rental they should hire a tax professional. 

Taxes and requirements should be much lower for a LTR

The absolute best way to avoid taxes is not earn income.  

But a specialist could be helpful if you have unique situations, want to explore advanced strategies, or simply save time.Cost varies - some charge hourly, some a flat fee.I'd recommend checking the tax pro button on top of the page and scheduling a free consultation.

And you now have to file three tax returns:- partnership tax return- your individual tax return reporting 1/2 of the partnership losses- your partner's individual tax return reporting their 1/2 of the partnership lossesAnd while partnership return can be DIY-ed, it probably should not be.

If you don't have an entity, this is a Schedule C activity.

You may be able to deduct mortgage interest and property taxes before the property is in service.