Room rental advice

[DownhillGoat]

I know there's a few guys in here that have rental properties so I was hoping to get some collective CP wisdom.

Looking to rent out a room in my place to help out with the mortgage and basically just looking for any tips, advice, things to watch out for etc.

Although a few specific questions:

-Is a single room taxed at the same rate as income? Not sure if it's different if it's just a room instead of the entire property.
-Also tossing around the idea of selling the place all together (doubtful, but a thought). Can the rental agreement be broken if I sell it or would I have to wait until the rental term ends?

Thanks in advance.

[Calgary14]

For taxes you'd have to include the income as rental income on your tax return which gets taxed at your marginal tax rate just as you would if you rented the entire place out. You can deduct the corresponding amount of mortgage interest, taxes, etc related to the portion being rented out. In other words if you have a 2000 sq ft home and you rent out 200 sq feet (one room) you can deduct 10% of your mortgage interest, taxes etc.

Not 100% sure on the rental agreement but I believe you can add a clause in there that it can be ended upon a sale, but I think you'd still have to give 3 months notice.

[REDVAN]

Does your usual homeowners insurance cover this kind of thing?

We are considering renting out our basement, and we live in an area where this would be an illegal suite. What are the insurance risks here?

[llwhiteoutll]

RTA doesn't apply to room mates, so no pesky things like notice. Sell when you want to and give them the boot.

[EldrickOnIce]

I rent out rooms month to month only, as roommate.
Easy to start to weed out less desirable by requiring two months in advance.
Has been almost no hassle at all, but is what it is - someone is living in your home.

[Smartcar]

I don't see why you would have to declare money paid to you by a roommate as income. As long as the amount paid is less than what you pay in interest on mortgage, property tax, utilities, maintenance etc. it's payment toward that, not income to you. It's not like a rental property where you're writing off the expenses against rental income. I'm sure if the proportion of expenses is higher than the income the CRA would disallow it anyway, since it wouldn't be just the size of the bedroom but also 1/2 of all the space your roommate gets to use.

[Calgary14]

Originally Posted by Smartcar

I don't see why you would have to declare money paid to you by a roommate as income. As long as the amount paid is less than what you pay in interest on mortgage, property tax, utilities, maintenance etc. it's payment toward that, not income to you. It's not like a rental property where you're writing off the expenses against rental income. I'm sure if the proportion of expenses is higher than the income the CRA would disallow it anyway, since it wouldn't be just the size of the bedroom but also 1/2 of all the space your roommate gets to use.

I can see what you're saying but unfortunately that's not how the tax laws work. Here's a link to more info on the topic.

http://www.cra-arc.gc.ca/E/pub/tg/t4...tml#P195_12960

[DownhillGoat]

Originally Posted by Smartcar

I don't see why you would have to declare money paid to you by a roommate as income.

Originally Posted by Calgary14

I can see what you're saying but unfortunately that's not how the tax laws work.

Frankly I think it's kind of BS but yeah I already looked it up on CRA and rental income is rental income.

Calgary14, maybe you can anser this; is it possible to write off 50% of common (shared) areas as well?