Asked
Can rental income be divided to 1%/ 99% to lessen the total tax owed? My partner and I are technically 1% / 99% percentage ownership as when we bought he was a first time home owner. My income was a lot higher than his this year so it seems to offset what I would owe if I put it in turbotax like this. Thanks.
Clint’s answer
Your program will allow you to, your CRA agent who audits you will not allow you to split the value of the property and subsequently the rental income or loss like this unless the original contract and title of the property is divided this way before the tax year... There are rules against tax planning after the fact... Because we don't pay taxes every time we get our rent revenue, it kind of feels like we can dodge and weave our way through when we balance our personal taxes at the end of the tax year to report our income and expenses, but there are rules stating we are not allowed, and taking a risk like this is not normally advised because it could come to roost when the sale of the property is made, and the hurt the CRA can put one through on the property ownership (factual and beneficial) can be very costly...
March 18, 2024
From Ask Clint: real questions from a Canadian public finance forum, answered by Clint Cole. Names are changed. This is general information, not advice for your situation, and rules and dollar figures may have changed since Clint answered. Terms