Renting a bedroom first time owner

[cardhu]

Stardancer is usually right on the money, but not this time. Renting a spare bedroom in your house does not jeopardize your principal residence exemption, at all. But as MG points out, claiming a deduction for CCA would.

If he claims this on his taxes, what does he gain?

Same thing you would gain by claiming your property taxes ... some provinces offer tax credits for occupancy costs, to people with income below a certain threshold ... not sure if MB has such a thing, but if your friend (or his Dad) is talking about claiming his rent payments, then they must ... its irrelevant to the federal side of the tax return.

If I claim this, what do I gain?

If your friend is claiming his rent, you’d first and foremost gain freedom from prosecution … you’d also be able to deduct a tiny fraction of certain house carrying costs (utilities/maintenance/mtg interest).

If your friend is not claiming his rent, then as Brenner points out there is some leeway to treat all of this as a contribution to household costs, rather than as rental income. In that case you obviously cannot deduct utility/maintenance/mtg interest costs. For you, this would be better financially.

I wouldn’t necessarily draw up a formal lease, but I would definitely draw up a simple agreement. You can see from the above that what you do and what your friend does are inextricably linked. Have a conversation about it. Agree with each other about how you’re going to treat it, and build that into the agreement.

I don't know about provinces other than Ontario, but in Ontario this person would not be a tenant but a roommate. http://www.ltb.gov.on.ca/en/Key_Info...02_111462.html

In case it isn’t entirely clear from MG’s post, this link relates only to the remark about the possibility that the friend might acquire certain “rights” by having a lease ... it has no bearing on the income tax questions.

[SheaButters]

K thanks guys, thats all I wanted, some input, and some things to read!

Thanks a lot!

I don't necessarily need the money, so I'll offer it up as he can be a guest in the house, name on food.

He gives me money to upkeep the house, no profit. Simple.

Cost-sharing arrangement is the proper term. Thanks a lot!

[marina628]

My daughter rented a room for a year and it worked out well with exception of the lady cashing rent cheques 2 weeks early lol.One thing I did like is she gave her a cupboard for herself and nobody else bothered that space ,they shared condiments and few things like this but they also had separate grocery shopping.I bring this up because that seems to be the one area that causes problems .Ie you go and buy yourself a nice steak and while in the shower he has it cooking how he likes it on the BBQ