Tax Questions: Shared Accomodations

[Hard Idle]

At what point does money from subleasing become taxable?

Is it a certain amount of money or a certain percentage of the total?

Does it have to be considered income if you are not making any profit off of it but only covering the lease amount?

If this is income, is it taxed at a higher or lower rate than other forms of income? That is are you better off invoicing the money as a payment for something like a making a website, or to report it as rent paid to you?

 

[fuji]

At what point does money from subleasing become taxable?

Is it a certain amount of money or a certain percentage of the total?

Does it have to be considered income if you are not making any profit off of it but only covering the lease amount?

If this is income, is it taxed at a higher or lower rate than other forms of income? That is are you better off invoicing the money as a payment for something like a making a website, or to report it as rent paid to you?

It becomes taxable the moment it becomes due and you have to report all of it as income. However, you can report all of the rent (and other) expenses as a deduction. If they are the same amount then you have +X$ and -X$ on your return for overall no effect, but you do have to put the numbers there.

 

[red]

if the other person claims it on their taxes as an expense- then you may be caught.

 

[LancsLad]

Residential or commercial? Business or personal? These questions need to be answered. While all forms of income and capital gains are potentially subject to tax, to a certain degree materiality and practicality come into play. If you had a rented house or apartment for your own personal use and moved out and got a sublet ( specify whether monies paid directly to main landlord by sub-tenant, or pass thru you) for 18 month of a 24 month lease, as an example, there would be little need to report both sides on your tax return. If you did not engage in this activity in " the nature of trade" then even the Federal gov't and their love of paperwork would not expect all taxpayers to clutter up their tax returns with inflated nil position numbers. That would drive stats Can nuts as suddenly Canadians gross income would go up with no effective change to net. You would then get distorted income numbers impacting policy decisions. Oh the joy.

If it is a business lease or combination business personal that is another matter. Generally most tax lines end at the personal level. as was said if someone is making a deduction for the payments there must be a non personal use element to the transaction. Again look at materiality.

 

[Hard Idle]

Clarification

The guy pays the rent to the owner, the other renters are all transients or foreign students and pay him in cash - they have never asked for or gotten any receipts.

This money is totally untracable. However the guy (who is self employed) is worried that if he provided documentation of his rent for the whole amount - $1'850/ month, it would exceed his monthly earnings to the point where someone could suspect he is paying for it out of some undeclared income. Is this a real concern, or could he just say his mother helps him pay his bills, if the math doesn't add up?

So is it better to just claim his share of the rent - $950/month - or should he claim the full amount and voluntarily declare the $450/mo he gets from the two room she rents out?