you can't rent what you don't own. so if your name goes on the title and his comes off, it's your rent. I would recommend that you even pay the mortgage. even though you are not on the mortgage you would be entitled to deduct the mortgage interest. this would be pursuant to IRS reg 1.163-1 (taxpayers can deduct interest paid on the mortgage if they are the legal or equitable owners of the mortgaged real estate, even if they are not directly liable on the debt). Also pay the utilities.. this way you report the rental income a a prorata of all expenses on schedule E. you also claim depreciation based on the low of your dad's basis or FMV on date of transfer. you would report on schedule E all the rent and a pro-rata of all expenses (assuming you pay them ) based on square footage rented to square footage of the house.
your father would have to file a gift tax return because the FMV of the property is greater than the annual exclusion. also inform your insurance agent about what you are doing.
