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travis-thorup
New Member

I'm renting out 2 rooms in my condo (which is my primary residence). What do I need to be aware of in terms of taxation?

It's my primary residence, having the roommates helps lower what I directly pay into the mortgage, though I still have to pay (not making a profit). Do I need to fill out something special for this?  Not sure this counts as additional income since it's going directly to the mortgage payment each month.  Just wondering if there are additional hoops I need to jump through?
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Accepted Solutions
ColeenD3
Expert Alumni

I'm renting out 2 rooms in my condo (which is my primary residence). What do I need to be aware of in terms of taxation?

There is a difference between having tenants and cost-sharing with roommates. It seems as if you are merely cohabiting and splitting the rent as opposed to having a landlord/tenant relationship.

 

Cost Sharing

You may have questions about whether or not you should claim rental income received from relatives or friends that live with you, and whether or not you can also claim rental expenses. This depends on the type of rental agreement you have with the tenant. Think of cost sharing as charging your relative/tenant a small amount per month to help with groceries, utilities, or general household upkeep. The amount charged would be far less than market value for the rental on the open market. In cases like this, you would not report the income from the cost sharing, but you also would not be allowed to claim any rental expenses.

 

In Cost-Sharing arrangements, the Property owner cannot claim a Rental Loss. If you lose money because you are renting a property to a relative for a lower rate than you would rent it to other tenants, you cannot claim a rental loss. When your rental expenses are consistently more than your rental income, you may not be allowed to claim a rental loss because your rental operation is not considered to be a source of income. 

 

If you charge a tenant fair market value for the rental, and expect to make some form of profit, you should report all rental income received, and you claim rental expenses consistent with the nature of the rental arrangement.

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1 Reply
ColeenD3
Expert Alumni

I'm renting out 2 rooms in my condo (which is my primary residence). What do I need to be aware of in terms of taxation?

There is a difference between having tenants and cost-sharing with roommates. It seems as if you are merely cohabiting and splitting the rent as opposed to having a landlord/tenant relationship.

 

Cost Sharing

You may have questions about whether or not you should claim rental income received from relatives or friends that live with you, and whether or not you can also claim rental expenses. This depends on the type of rental agreement you have with the tenant. Think of cost sharing as charging your relative/tenant a small amount per month to help with groceries, utilities, or general household upkeep. The amount charged would be far less than market value for the rental on the open market. In cases like this, you would not report the income from the cost sharing, but you also would not be allowed to claim any rental expenses.

 

In Cost-Sharing arrangements, the Property owner cannot claim a Rental Loss. If you lose money because you are renting a property to a relative for a lower rate than you would rent it to other tenants, you cannot claim a rental loss. When your rental expenses are consistently more than your rental income, you may not be allowed to claim a rental loss because your rental operation is not considered to be a source of income. 

 

If you charge a tenant fair market value for the rental, and expect to make some form of profit, you should report all rental income received, and you claim rental expenses consistent with the nature of the rental arrangement.

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

View solution in original post

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