If my name is on the title and mortgage; however, I don't pay the monthly mortgage. Can the person who has been collecting the rental checks and paying the mortgage report the rental income on their taxes?
The rental income/expenses is reported by the one who actually receives the income and pays the expenses. The mortgage interest is only deductible by the person(s) who are legally obligated to pay it. So regardless of who paid the mortgage interest, the person(s) legally obligated to pay are is/are the one(s) who claim it.
Now the term "legally obligated" can be a bit mushy at times. If the person who pays it is not on the title or mortgage, but they can prove a "vested interest" in the property, they can claim the mortgage interest. But if audited on it they will need to be able to prove a vested interest. If they can't, then *you* the owner will need to file SCH E to report all the rental income and expenses, as well as claim the mortgage. Then any monies left over (of which there will not be one single penny left over) is "gifted" to the actual recipient of the rental income.
