# Rental income deducations?



## Kaitlyn (May 13, 2011)

I own a place and have a roommate who is paying for rent - which expenses can I deduct?
- condo maintenance fees?
- monthly utilities?
- property taxes?

Is there anything else?


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## Potato (Apr 3, 2009)

Do you have a reasonable expectation of profit? If not (and that's reasonable given that it's a roommate and not a separate unit), just call it a cost-sharing arrangement and save the headaches.


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## Kaitlyn (May 13, 2011)

Potato said:


> Do you have a reasonable expectation of profit? If not (and that's reasonable given that it's a roommate and not a separate unit), just call it a cost-sharing arrangement and save the headaches.


I do believe there is profit when all is said and done - but no I am not renting it out "to make money".

But don't I HAVE to claim the rental income as income? In which case I would want to make the reasonable deductions against that


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## MoneyGal (Apr 24, 2009)

Potato said:


> Do you have a reasonable expectation of profit? If not (and that's reasonable given that it's a roommate and not a separate unit), just call it a cost-sharing arrangement and save the headaches.


If you want to call this a cost-sharing arrangement, CRA expects that:

(1) you will be renting to a "connected person" (i.e., a family member), and
(2) you will be charging below market rent. 

Here's the relevant part of the CRA guide on rental income: http://www.cra-arc.gc.ca/E/pub/tg/t4036/t4036-e.html#P560_53022


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## Potato (Apr 3, 2009)

Kaitlyn said:


> But don't I HAVE to claim the rental income as income? In which case I would want to make the reasonable deductions against that


Yes, if you have income, you must report it, and take what deductions you can. But from the cases I've seen of a roommate, it's usually someone trying to find deductions to generate a loss against other income, which you can't do year after year, hence the question of reasonable expectation of profit.

Mortgage interest can be tricky, but for the sake of argument let's say yes until we find out more details of the situation. Utilities (if not billed separately from the rent), condo fees, property taxes, maintenance expenses (all appropriately pro-rated) are your typical expenses. Capital cost allowance/depreciation is another tricky one often best left alone, but you can look it up.


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## peterk (May 16, 2010)

If it were me, I'd just ignore the situation. There are 12.4 million dwellings across Canada, with I'm sure 1-2+ million that are renting a room to someone without even understanding that they should be reporting income. I think this is one of those situations where you can play-dumb and nothing will happen. If you're paranoid, why not charge 100 bucks off market rate and claim the roommate is a close personal friend. If you're super paranoid, get them to pay in cash.

P.S. This may be TERRIBLE advice. I've never done such a thing as I've never owned a house. Just my own personal opinion on the subject. 'Tis better to ask forgiveness than permission.


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## Kaitlyn (May 13, 2011)

peterk said:


> If it were me, I'd just ignore the situation. There are 12.4 million dwellings across Canada, with I'm sure 1-2+ million that are renting a room to someone without even understanding that they should be reporting income. I think this is one of those situations where you can play-dumb and nothing will happen. If you're paranoid, why not charge 100 bucks off market rate and claim the roommate is a close personal friend. If you're super paranoid, get them to pay in cash.
> 
> P.S. This may be TERRIBLE advice. I've never done such a thing as I've never owned a house. Just my own personal opinion on the subject. 'Tis better to ask forgiveness than permission.


Yea, the thing is I just don't know I guess! They actually are a VERY good friend. When/if they leave, I do not intend to rent to someone else... so it is one of those "below market rate"/"not for income" type of things... but I don't think the expenses exceed income, so there is profit...


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