Do co-owners of a rental property need to file a partnership return, or can they each report individually?

In most cases, no - co-owners who simply own a rental property together and split the income and expenses proportionately are not required to file a formal partnership return. Co-ownership and partnership are different legal concepts: straightforward proportionate co-ownership, without more, is typically reported by each owner individually on their own tax return, using their own share of the income and expenses.

Whether a true partnership actually exists is a genuinely fact-driven question, though, and it's worth being honest with yourself about which situation you're in. Factors that point more toward an actual partnership include actively carrying on a joint rental business together beyond passive co-ownership, sharing management decisions and profits in a partnership-like way, or holding yourselves out to others as operating a business jointly rather than simply owning an asset together. Most everyday co-ownership arrangements between family members, friends, or investment partners fall on the individual-reporting side of the line, but because the distinction depends on how the arrangement actually operates rather than a fixed test, it's worth reviewing your specific situation if the relationship looks more like a joint business than simple co-ownership.