# Renting a House



## Simon Says (Jan 5, 2013)

Hello all, I've been thinking about moving lately and renting my home to my parents. They are amazing people that will take good care of the place for me. But having never rented a home before I'm not sure what I may be missing. I did some reading and it appears that I need to change my home insurance and I will need to claim the income from the rental on my tax return. Additionally some repairs, property taxes and more may be deductible. Is there anything else I need to think of? These are my parents so a lease agreement etc is really not necessary, neither is first and last or deposit. I'm not sure what rate the rental income will be taxed or what percentage of the deductibles I will get back. Any advice or general guidance for a newbie would be helpful.

Thank you,

Si


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## Mortgage u/w (Feb 6, 2014)

Couple of things to consider. For starters, you should treat this as a true rental. So a lease is required, even if its your parents. You never know when someone may come knocking to validate your operation. You will be required to declare your income and will be permitted to deduct any mortgage interest, taxes, insurance, utilities if you assume them and any maintenance costs. The balance will be considered gross profit which will be added to your regular income and then taxed according to your bracket.

You will also need to consider future capital gains when you eventually sell. You will be exempt from capital gains during the years you occupied the place but not while rented. It would be a good idea to have the property appraised so that when it comes time to calculate your capital gain, no one could argue today's market value vs the sale price (the difference is what will be considered as the gain). 

My personal advice is to sell the property to your parents instead. This way, no capital gains will have to be considered nor will you have to pay any taxes on rental income earned. All depends on your intentions with this property.


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## twa2w (Mar 5, 2016)

I assume you will not also be living in the house? Are you moving out of the country? Do you still have a mortgage?
Are you going to charge market rates for rent.? Do your parents want to rent your house? These could affect your taxation.

Mortgage u/w has given you good information, although on capital gains IIRC CRA also allows a simpler calculation based on time as PR versus time rented. IOW if you own the house 20 years and rented it for 12 years then 12/20 or 3/5 of the gain would be taxable.


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## nobleea (Oct 11, 2013)

twa2w said:


> although on capital gains IIRC CRA also allows a simpler calculation based on time as PR versus time rented. IOW if you own the house 20 years and rented it for 12 years then 12/20 or 3/5 of the gain would be taxable.


Sure, but growth in RE values is never linear, and given the large run up many places have seen of late, the the likely crash or stagnation to come, one would be better to lock in that growth under the personal residence exemption.


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## twa2w (Mar 5, 2016)

Fair enough.

But the OP may want to look at this as well because you can extend the prin residency by 4 years or more

https://www.canada.ca/en/revenue-ag...pal-residence-a-rental-business-property.html

And 

https://www.canada.ca/en/revenue-ag...olio-s1-f3-c2-principal-residence.html#N10935


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## Simon Says (Jan 5, 2013)

Thank you all for the excellent advice! I apologize for not getting back on here sooner, my son had some crazy stomach flu and my wife had surgery so I have been unable to get back here. Great information and something to definitely consider.

Regards,

Simon


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## jimmiegr (Dec 21, 2017)

*Know more about real estate law*

I hope your soon and you wife are getting better.

Perhaps you can know more about real estate law:
Laws are an external set of rules of conduct, in their relation to others, set forth by competent bodies coercively imposed on citizens and that tend to make possible the harmonious social coexistence of men
Infringement of the law involves legal consequences. From this we can, in some way, characterize the legal rule:

Mandatory: the law is a mandate and, consequently, people have the duty and the obligation to comply. And this is recognized in the Spanish Constitution in its article 9.1 stating that citizens and public authorities are subject to the Constitution and to the rest of the legal system.

Furthermore, we also cite article 6.1 of the Civil Code, which indicates that “ignorance of the law does not excuse compliance”.

Collectively the legal rule stems from the political power, in all its manifestations (parliamentary monarchy, republic …) and as a result its compliance may be coercively imposed by force and through sanctions. For which the judicial power is basically responsible.

Voluntary Compliance: in spite of seeming contradictory, in the light of the previous aspects, it is precisely this third idea which gives character to the legal rule; the most important effect being that the law is obeyed and enforced.


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## AltaRed (Jun 8, 2009)

^ Garbage spam this is.... Moderator?


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