Had a discussion with an acquaintance the other day concerning taxation and having two principal residences. Something didn't quite strike me as right so I thought I'd pose the question to the group here:
He is in the process of moving to a new house (of which him and his common law wife are on title) and is proceeding to rent out his existing condominium. His strategy is that he will not declare his condo as a rental property (and not deduct mortgage interest etc.), but rather, leave things as they are-- collect rent and pay the mortgage as if he were living there. When it comes tax time, he will make no mention of this "extra" rental income.
His strategy is that he will maintain the condo as a "principal residence" along with his new home -- his name appears on title for both properties.
My question is, how would CRA treat this situation? And how would CRA even know which is principal and which is not if it's never declared as such?
This appears dangerous (and illegal) to me, but wanted to see what others thought.
He is in the process of moving to a new house (of which him and his common law wife are on title) and is proceeding to rent out his existing condominium. His strategy is that he will not declare his condo as a rental property (and not deduct mortgage interest etc.), but rather, leave things as they are-- collect rent and pay the mortgage as if he were living there. When it comes tax time, he will make no mention of this "extra" rental income.
His strategy is that he will maintain the condo as a "principal residence" along with his new home -- his name appears on title for both properties.
My question is, how would CRA treat this situation? And how would CRA even know which is principal and which is not if it's never declared as such?
This appears dangerous (and illegal) to me, but wanted to see what others thought.