Renting a portion of your Home
Cost-Sharing Arrangement: When you rent to a relative or a close friend, and you are charging them less than the fair-market value, you cannot write them a receipt nor can you claim rental expenses. This is considered an arm’s length transaction and as such, does not qualify as deductions for you and your relative (or friend) cannot benefit from it claiming it on their taxes to receive more Ontario Trillium Benefits (OTB).
Rental Income From a Boarder: If you are renting a room (or several rooms) in your home with the intention of making a profit, you can write each boarder a rent receipt for the rent they pay you (rent must not include groceries). This will help them receive their entitled OTB payments for the rent they paid you. You will then complete a Rental Activities Log (under Business Client) and submit this with your tax return to claim the expenses of running your home.
Examples
- Lucy’s mother Ethel moves in with her in January 2017. Ethel is giving Lucy $400 a month to help with the groceries and utilities. This is a cost-sharing arrangement and does not qualify as rent paid by Ethel or Rental income collected by Lucy.
- Fred has a 4 bedroom house and lives alone but lives near the college. He places an ad in the newspaper and soon has 3 college students living with him. He charges each student $450 a month in rent and all are responsible for their own groceries. At the end of the year, Fred will issue a rent receipt to each student for the rent they paid him. This is considered a non-arm’s length transaction as Fred is doing this to make a profit. The rent receipts will ensure that each students receives the OTB they are entitled to.
Posted in: GENERAL INFORMATION ABOUT REVENUE CANADA
