Rental income taxation in Canada

I and my mom are co-owners of a house. I receive rental income from the house. Also, we both live in this house.

If my mom pays part of the property tax, then she can claim OSHPTG (for senior house home owner) and OEPTC.

Questions:

  1. Is it ok for her to pay part of the property tax if I claim all the rental income?

  2. What type of house related expenses can I claim? (e.g. repair and renovation)

Thanks.

Depends who owns the portion of the house being rented. If you can define a portion of the house that is “yours” as opposed to “your mom’s”, and the rented portion is entirely within “your” portion, then logically you should report all the rental income. In most cases, I don’t think that would apply, so you and your mom would split the rental income (regardless of who pays the property tax).

You can deduct any expenses that are required in order to provide for the rental, which includes property taxes, insurance, mortgages interest, repairs, and even utilities (if your tenant doesn’t pay for their own). However, you can deduct only the portion related to the rental. For instance, if you are renting out a room, and that room is 10% of the living space of the house, you can deduct only 10% of the related expenses.

You can also deduct CCA (depreciation) on the portion of the house that is rented, but if you live in the house, claiming CCA will affect the Principal Residence Exemption (PRE) when you sell the house. Note that if you rent out a significant portion of the house, that will affect your ability to use the PRE (i.e. you will have to pay tax on the sale of your home).

I actually seen this question a lot, but a more complex workaround, which I don’t know why someone would do it, is, have the owner, let say is the mom that has 100% ownership, reports the net rental income, and pay out sufficient management fee to the child that wants to report the net income, but in this case, not rental, it would be business income. If the child is living there too, potential benefit on free rent might need to consider.

We might also, have to consider the principal residence might be tainted, so, maybe too much work, for too little benefit

@simon_suen789
Since both (1) and (2) of what you suggest are illegal in the circumstances you describe, I would strongly advise against it.

Also, I would strongly advise against trying to obtain “legal advice” from internet postings. In particular, the Income Tax Act is a complex (and very long) thing, and few people have a good grasp of its legal implications.

You should be easily able to get a referral to a nearby CPA from your local Provincial CPA association office to assist you in remaining on the right side of the law and to examine and interpret any documentation that you may have.

One cannot simply make up things to report, allocating revenue and/or expenses on a whim.

@joe.justjoe1 I really doubt that there is anything illegal about her paying the property tax. i don’t think CRA cares whose money is used.

Or PBA: https://www.pba-canada.org/
Or RPA: https://rpacanada.org/
Or ATAP: Welcome To ATAP | Association Of Tax & Accounting Professionals across Canada

RPAs are the new PBAs as CMAs, CGAs, and CAs are the new CPAs.