A married couple purchased a rental property with a family member. The house is under their names only, not an LLC. Is it recommended to move the house into an LLC for tax depreciation purposes? Will both parties be able to claim the depreciation on their income taxes because they have split everything 50/50? What is recommended?
No, putting the property into an LLC would make no difference on your tax return. As it stands right now, you didn't purchase any part of the property and do not own any of it. You basically either made a loan to the buyer or a gift to them, and they used the money to buy property. You can only deduct depreciation for the portion of the property for which you paid, which would be zero in your case.
You can start an LLC that chooses to file as a partnership or an S Corp, but just being an LLC will make no difference. You would then have to file a tax return for the partnership or corporation