And they cannot claim it if they did not pay it. If you paid their mortgage for them then that is a non deducible gift and if over $15,000 for the year to one person would require a form 709 gift tax return to be filed.
It sounds like you are managing the property for your parents so the rental income would be theirs to report.
I would suggest that you sit down with a tax professional (not a store front tax mill) but a professional that deals with real estate income and tax law. $1.00 agreements can be looked upon as shams to avoid tax. You need professional help.
**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
