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For the tax questions - I think that as long as I charge DS market rent, then this is just the same as any other rental property with the regular deductions and depreciation. But what about for DS? I'm sure he will have to claim the roommate rent as income, but how is having roommates different from being a landlord relative to taxes? He wouldn't have any depreciation, so I am thinking that it might all be pure income to him, as I also can't imagine that he'd have much in the way of expenses, since that should flow to us as owners and landlords.
"Roommate income" IS rental income. It sounds like you're taking the position that DS is the only tenant, and what the roommates pay is something you're not involved in.

If you want to make it simpler, why not just take DS out of the middle and make the 2-3 of them the tenants, including DS for his share of the rent?

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