Can Spouse Report Majority of Rental Property Income? - Page 2
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Thread: Can Spouse Report Majority of Rental Property Income?

  1. #11
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    I am guessing that a TFW is not classified as a resident of Canada in its strictest definition. Kind of like a student Visa with a very distinctive and narrow definition of what is permitted. Beyond my pay grade though for an educated opinion :-/


  2. #12
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    Quote Originally Posted by Numbersman61 View Post
    The Income Tax Act has attribution rules which require the income to be reported by the spouse who provided the means to acquire the property.
    But that is simply not enough guidance to deal with many situations. What happens if my wife and I inherited the property jointly or when one of the joint owners pops his/her clogs and the ownership attribution changes? In this instance the CRA would undoubtedly accept ownership percent as the appropriate breakdown. There are numerous situations where the precise money input would be basically untraceable. In my case, for example, mortgage payments came from a joint account with my wife and it would require a monumental forensic analysis to work out which dollar came from who's income -- or from what gift from who's relatives, to whom, and went where -- over the past 25 years. The tax rule is designed to enable them to go after people on the fiddle, but they do not provide enough useful guidance to normal people just trying to stay clear of trouble.

  3. #13
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    Quote Originally Posted by Numbersman61 View Post
    I feel this comment is incorrect. The Income Tax Act has attribution rules which require the income to be reported by the spouse who provided the means to acquire the property. For example if I gifted $100 thousand to my spouse to enable her to buy a stock, I would have to report any income from that stock even if it was registered in her name.
    I think you are mixing 2 separate issues. Reporting money generated on a loan (or gift to buy stock as you mentioned) is not the same are property allocation. I can purchase a rental using solely my funds but still allocate 50% ownership to my spouse.

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  5. #14
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    Quote Originally Posted by Mortgage u/w View Post
    I can purchase a rental using solely my funds but still allocate 50% ownership to my spouse.
    But Numbersman61 is certainly right in that the rules are not written that way. That situation MIGHT look to the CRA like a fiddle where you are shifting income attribution improperly and evading taxes.
    What puzzles me is how they DO handle these situations, and how fussy they might get.

  6. #15
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    Quote Originally Posted by Mortgage u/w View Post
    I think you are mixing 2 separate issues. Reporting money generated on a loan (or gift to buy stock as you mentioned) is not the same are property allocation. I can purchase a rental using solely my funds but still allocate 50% ownership to my spouse.
    When asked this particular question about how to report the income where the husband provided the $$$, the ownership was setup as 50/50 and the wife was a stay at home mom without income, the response disagreed with with you are saying.

    Legally if ownership is 50/50, you must report the income 50/50.

    However, for income tax, there is the issue of income attribution. i.e.: whose money was used to purchase the property or was it a Line of Credit with both names.
    If your husband used his money and put the property in both your names, then technically all the rental income or losses should be reported by him.
    http://caringforclients.com/index.cf...8&blogid=17028


    Cheers

  7. #16
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    Quote Originally Posted by gardner View Post
    ... That situation MIGHT look to the CRA like a fiddle where you are shifting income attribution improperly and evading taxes.
    What puzzles me is how they DO handle these situations, and how fussy they might get.
    What puzzles me is the bias that the idea of "income property registered ownership alone" sets who reports the income/gains.

    For the joint investment account, as I understand it, the source of the money determines which person reports the income/gains. The rental property also produces income/gains so why would the source of the money be irrelevant?


    Cheers

  8. #17
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    I think there is a mixing up of situations here. It is one thing to have a principal residence with joint ownership at 50/50 and it matters not who provides the funds for it.

    It does matter a lot for an investment property. Regardless of joint ownership, declaration of rental income is attributable to who provides the funds. Look at the tax forms regarding declaration of rental income and/or cap gains on disposition. There is a box for "percentage" of 'ownership'. Remember that joint ownership (joint tenancy) is nothing other than undivided interest, i.e. it is NOT specifically 50/50 ownership. One must still allocate income according to contribution.

  9. #18
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    Quote Originally Posted by AltaRed View Post
    It is one thing to have a principal residence with joint ownership at 50/50 and it matters not who provides the funds for it.
    But in my personal situation we have a former principle residence converted to a rental. We would have a very hard time working out, much less proving, how exactly the acquisition cost is balanced between my wife and I. The best I could argue is that it's around 50/50.

    In any event, we could, at the stroke of a pen, convert it to tenants in common with specific ratio, and then the ambiguity of interest vs ownership should be resolvable. But the CRA's rules about the origin of the capital outlay would still prevail.

  10. #19
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    Quote Originally Posted by gardner View Post
    But in my personal situation we have a former principle residence converted to a rental. We would have a very hard time working out, much less proving, how exactly the acquisition cost is balanced between my wife and I. The best I could argue is that it's around 50/50.
    I believe in this case the correct answer is 50/50 because principal residences are regarded as common marital property, regardless of who pays for them. But I don't know for sure!

  11. #20
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    ^^^

    I would think so as well ... though as the OP is buying a rental property instead of converting a primary residence, the situation is different.


    Cheers


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