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You would report the rental on Schedule E. You can deduct expenses that you have on the property.
Listed below are the most common rental expenses.
Auto and travel expenses.
Cleaning and maintenance.
Legal and other professional fees.
Local transportation expenses.
Mortgage interest paid to banks, etc.
If you are only renting a portion of the property then the expenses are also dictated by the percentage.
The money you hold for someone is not taxable nor reported. As long as you are not holding it for them to bypass any customs violations then there is no problem.
If you have been reporting the income but not the expenses you can amend you past returns (at least the last 3 years).
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