condo ownership - rental to daughter


My wife and I have just purchased a condo at UBC. Our daughter, a student,
and another student (paying tenant) are living in this new condo.

We are interested in learning information pertaining to related tax
implications/deductables in owning the condo and additionally what are the
capital gains implications when selling this condo?

thanks -

david ingram replies:

You are caught between a rock and a hard place.

The CRA will not allow a rental loss if the property is rented to a family
member UNLESS there is absolute proof that the rent is a fair market value
AND you are renting it with the expectation of a rental profit in the near

THEN, the CRA will want to tax you on any capital gains when you sell it.

You might want to consider loaning your daughter the money to buy the condo
so that when it is sold, it is "her" capital gains tax free as her principal

CRA Bulletin IT-533 gives a good dissertation on deducting interest, the
paper flow necessary, and the expectation of profit from a rental. NOTE,
that an expected profit from capital gains does not count as an expected
profit when it comes to deducting interest against current income from
other sources.

Reading the following might help:

Mortgage interest starts after a blurb about US tax returns.

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