@user17523314011 , recognizing the different view points of my colleagues @Bsch4477 , @AmeliesUncle and @M-MTax , my struggle here is that :
(a) income ( direct or indirect, cash or non-cash) must be recognized -- unless specifically excluded by statute;
(b) US tax system being "voluntary", depends very much on perjury jurat; also just because IRS does not "catch" each and every infraction, is not license for knowingly ignore facts and circumstances
(c) As a second home and used for personal purposes, you cannot recognize any losses and of course there may be nil/partial depreciation to contend with. This includes second homes with mixed usage ( like rental plus personal usage beyond the allowable 10%). Only improvements are allowed to be added to the basis. Repairs are personal expenses unless deducted against rental expense. There are of course some more ands, ifs and buts in such mixed usage case.
(d) Given the above, my position is that you should consider this as rental income reportable on schedule-E and if the rental is NOT FMV for the area and type, then recognize the difference as gift ( probably under the free limit for the year ) to the relative.
(e) Depending on the exact facts and circumstances ( especially antecedents and intent at acquisition ) there is the possibility ( may be remote ) to consider this as equitable ownership by the son -- i.e. it was acquired for the exclusive use of the son ( whom pays the mortgage, the prop. taxes etc. , uses it as his main residence and paid the down-payment etc. )-- just that the title and mortgage are held by the parent as a stand in for the son.
Is there more one of us can do for you ?
