Your kids are packing their bags for university residence and all of a sudden, you have a spare bedroom or extra basement space. It sounds like easy money to put your space up for rent, but consider these factors when deciding whether or not it’s a good decision for you.
Finding People for Your Space
Your rooms are all cleaned and now it’s time to find tenants to occupy the space. If you’re renting out a basic basement space then consider putting ads up in nearby grocery stores or access university campuses. Online ad websites like Craigslist or online forums are becoming a popular place to access rental ads. It’s important to include information about whether you mind pets or smoking in your posting.
Once you’ve received a few inquiries, take some time out to screen the candidates. As a landlord, you can ask about income and work, but you cannot ask about ethnic background, religion or sexual preference, or whether the future tenant may be single, divorced or married. Ask for references from the candidate to learn more about their personality and habits.
What’s the Landlord Responsible For?
It’s the landlord’s responsibility to ensure the space is safe for your tenant whether that’s doing emergency repairs right away or making time to do regular repairs.
Renting to a bad tenant is a risk that comes with becoming a landlord. When the problems involve rent payments, the landlord can evict the tenant with assistance from the provincial or territorial rental authority. There’s a proper procedure that needs to take place before landlords can attempt to evict their tenant.
How Renting Affects Your Taxes
Depending on your situation, you may need to include your rental income when you file for taxes.
If you’re renting to someone and splitting the cost of living expenses and not making/planning to make a profit, then you won’t need to report it when you file your taxes. But, if you’re planning to use that space to make a profit, then you’ll need to include that information on your income tax return. If your rental space incurs a loss or requires any expenses, a list of deductible expenses can be found at the Canada Revenue Agency, you should also include that information when tax time swings around.
Differentiate between whether the profit is rental income or business income. If you are providing basic services such as light, electricity and water, then the income is rental income. If you’re providing meals, cleaning and security to your tenants, then it could be business income.