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If I rent and sublease to make my rental payment is this income?

25786 Views 11 Replies 6 Participants Last post by  OhGreatGuru
I have had some real financial difficulties in the last couple of years. I have children to support and have looked beyond my full time job for extra income but in this climate - nothing! I pay my ex alot of support based on an income I no longer have - I have a court hearing pending on that, not to worry.

Here is my question: his lawyer is asking me to report rental income because he knows that I have a roommate. Is this really rental income? Also, I have sub-leased my condo for one - two weeks to make enough money to pay the rent in really bad months - like those leading up to Christmas and summer holidays.

I am concerned that I have this right - I have read that if I use sub-leasing to pay my rent and I don't make money over and above my rent that needs to be paid, that it isn't rental income. Is this true?

Also, if I have a roommate who is sharing in my rent and I don't own the house, how is this different than a bunch of university students living together with one person taking main responsibility for paying the landlord?

Does anyone out there know the answer or have experience with this? Your help is really appreciated!
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It's a bit of a trick question. CRA's web site has no clear direction on this. I think because they don't want to leave any loopholes for people to crawl through. Instead they simply seem to treat everything as rental income.

But in practice I think the kind of situations you describe generally go unreported, and CRA doesn't do anything about it, because there is no Net Taxable Income. For example, suppose you reported your roommate's contribution to the rent as rental income. But you would be allowed to deduct as an expense a proportionate share of the rent you are payng the landlord as your "cost" of providing your roommate's space. So you have no net rental income. I believe the 1-2 week sublet would fall into the same category.

Your ex's lawyer is not asking just about taxable income though. He is trying to get data on your actual living costs and income as it affects your ability to pay support. For example you can't claim you need $2000/month to pay for your condo if in fact you have a roommate who is paying half.

In any case you should be talking to your own lawyer, not us amateurs, particularly if your financial circumstances have significantly changed from your original settlement.
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I am sure that your lawyer has an opinion on these matters....

IMO....sub leasing of condo...probably should be reported....

However what makes them think you have a roommate, especially if that roommate were to pay in cash, and assuming you can trust that roomy...;)
Ultimately your lawyer will have dealt with these situations several times before and will know what is and is not reasonable.
Your situation with a roommate is more like a joint tenancy agreement than a typical rental situation. According to the Landlord & Tenant board tenancies can be verbal and just as legal.

I don't believe that CRA would consider that you are a "landlord" in the business of renting out apartments. First of all every business requires the expectation that some profit would be realized. You would also be allowed to claim some office expenses, mileage, perhaps decorating expenses and other items of such a nature. Secondly there is a requirement that businesses be legal and such a business would not be. In Ontario you are not allowed to "sublet" your apartment for more than you pay. So for instance if you find a waterfront condo for $600 per month you are not allowed to rent it for $1200 to someone else. You are also not allowed to rent a house with 4 rooms for $1500 and then rent each room for $500. People do it but it is not legal. This is legislation left over from when rent control was in effect and people were doing that.

I know this is clear as mud but I hope it helps:p
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his lawyer is asking me to report rental income because he knows that I have a roommate.

Just to reiterate. You shouldn't be teling your ex's lawyer anything directly in case you get trapped into saying something you shouldn't. Refer all questions to your own lawyer.
isn't hiding your income and cash flow illegal, immoral, and unethical?
sprocket....you should tell them that next time you go into a chinese restaurant and they say 'cash only' so that they don't have to report the income...that would be too funny.

sherry...i am sure that your lawyer will argue that the extra cash is necessary to support your family's living conditions. Believe me, I am aware of how stressful these situations can be. It will all work out in the end.

You do have a lawyer right?
I am concerned that I have this right - I have read that if I use sub-leasing to pay my rent and I don't make money over and above my rent that needs to be paid, that it isn't rental income. Is this true?
!
Technically, if you receive money from rent, you should declare it. However, you can also declare all related expenses you have to "make" this money.

Therefore, if your rent cost $1000 and you splitting expenses 50%/50%, you will earn $500 a month from your roomate but spend $500 (half of your rent) to earn this money. So the sum is $0... you declare your income, but it turns out to be a $0 income ;-)
Sprocket go back to your trailer park quick your idiocy is showing and it's embarrassing me. I'm Canadian and I'm ashamed to be associated with the likes of you. Racist.:confused:
To everyone: this is a family law issue, not an income tax issue. Precisely what information her ex's lawyer is entitled to have on her rental costs, whether gross or net; and sources of income, whether gross, net, or taxable; is a mattter to discuss with her lawyer.
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