It depends. It may just be a cost sharing situation.
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.
However, you can claim a rental loss if you are renting the
property to a relative for the same rate as you would charge other tenants and
you reasonably expect to make a profit. In cost-sharing situations like this,
the tenant will not be able to claim any tax benefit from Rent paid, or any of
the Rental tax breaks provided, such as a portion of the Ontario Trillium
Benefit.
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.
