Should you transfer property to a child and then rent it from them? Jul 27th

There are more insurance options in Canada than you can shake a stick at! Stay on top of the best policies right here.
Latest News
 travel insurance

Tontines in Canada: Moving from theory to practice as a solution to our retirement crisis Sep 29th

For years in his academic papers and some of his 17 published books, famed Canadian finance professor Moshe Milevsky described the history and theory behind a seemingly obscure retirement/longevity insurance structure known as the “tontine.” Milevsky, who works at the Schulich School of Busi.... More »

Cisco’s Fast Future Innovation Awards is Accelerating Canadian Innovation, Returning for 2022 + MORE Sep 13th

An innovative idea is like a ripple in an ocean: given the right push, it can become a tidal wave. That’s something Mathieu Lachaîne, the Chief Technology Officer of Montreal-based smart-building-technology firm Sentiom knows firsthand. Sentiom developed a cutting-edge AI-driven monitoring-and.... More »

TFSA contribution room calculator + MORE Aug 28th

TFSA contribution room calculator Find out your current tax-free savings account (TFSA) contribution limit by using this calculator. Note that in the second box below, you should not “double count” contributions that you have withdrawn and then legitimately re-contributed in the following.... More »

Do I really need life insurance? + MORE Jul 31st

Life insurance shouldn’t be one of those things you put off thinking about—because you (and the people who depend on you) could need it at any time. But many do wonder if it’s worth the monthly premiums. How do you know if it’s necessary? Why do we need life insurance anyway? “In gener.... More »

5 reasons to buy life insurance—right now Aug 20th

If you’re working to improve your financial situation, a few strategies may come to mind: paying down debt, building an emergency fund, investing inside a tax-free savings account (TFSA) or a registered retirement savings plan (RRSP), or putting your money in other savings vehicles. These are all .... More »
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…

Continue Reading On moneysense.ca »

Share

PinIt
Compare insurance quotes through Kanetix.ca - save time and money!