Should you transfer property to a child and then rent it from them? Jul 31st

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Should you transfer property to a child and then rent it from them?

– moneysense.ca

I would like to know if transferring our home into our daughter’s name—can we stay and pay rent and get a rental home credit? Is it valid?—Satyesh

Tax credits when renting property from a family member

There is a lot to unpack with your question, Satyesh, but I will address your direct question right off the bat.

If you rent real estate from a family member, if you both treat it as a legitimate landlord-tenant relationship, you may be able to claim a tax credit just as if you were renting from a third party.

Ontario has an energy and property tax credit, Quebec has a solidarity tax credit, and Manitoba has a residential renters tax credit. Each of these has a rent component and may result in tax savings for lower income taxpayers.

Your daughter would report the rental income and deduct applicable expenses like property taxes, insurance, utilities (if she pays them) and mortgage interest (if applicable). It bears mentioning that she may end up paying more tax on the net rental income than you would save on the tax credit…

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