Mexican Property

[ED SMITH]

Client lives in US and "owns" rental property in Mexico. Title is in daughter's name who is Mexican citizen. Land was bought in her name and he constructed the buildings. He is not allowed to own property in Mexico.

Client receives income from rental, pays expenses and essentially manages property. He wants to know how this has to be reported. (My gut feeling is he doesn't want to report anything).

I told him that he was the "de facto" owner of the property and that it should be treated just like any rental property.

Does anyone disagree or have any other ideas about handling this?

TIA, ED

[jainen]

clients tell me

When my clients tell me they don't want to report something, I tell them I won't report anything.

[taxmandan]

Mexican property

Sounds to me like he is in the business of managing rental properties rather than being an owner. If he's not on the deed, mortgage or other ownership docs for the property I can't see how he can be considered the "owner." This would put his income and expenses from the activity on a Sch C not Sch E, thus subject to SE tax.

[RLymanC]

MX Rental

If he is simply handling the "Owners" income and expense, and not chargeing the usual 10% mangament fees would he be in business???

[taxmandan]

Mex property income

Perhaps I am assuming too much, "Client receives income from rental,..." I took that to mean he is keeping the net after expenses from the rental incomes. If he is, then he is in business, if he is sending the net to his daughter (the legal owner) and not charging a management fee then he isn't in business.