NRA couple own US property in form; US resident in substance

[ND]

Cdn NRA husband/wife purchased and took title to a property in San Diego.

Effectively NRA husband/wife did this more as a favour for their US relatives since the US relatives couldnt qualify on their own as buyers of the property. For all intensive purposes, it's the US residents who own the property and are living there. However when the property is sold NRA husband/wife would share/reap financial benefit in any eventual gain on sale.


While the NRA husband/wife only have title, effectively the husbands sister and her husband are 50/50 owners. The husband's sister and her husband are living in the property and taking care of paying the monthly mortgage and expenses associated with the property.

Should this be set up and treated as some sort of rental property NRA husband/wife? What is the correct filing needed?

[JGCA]

Normally one who has title should show the income, if in fact the person holding title is not the rightfull owner then a Declaration of Trust should be invoked saying you are merely holding the property for the rightful owners and they should then declare all income and gains. Now if the trust document says that the owners holding title will only be entitled to income and part of the gain on sale then you on sale would report only your share of any gain. Again have an attorney who can draft up a trust agreement with your understanding between all parties then based on this proceed to file the tax return for the income to whom ever the trust or partnership document specifies.