Canadian wants to know about declaring income from an illegal rental suite.

My question is: Canadian-specific

QUESTION: We have an illegal basement suite in our home that we have just started renting out. We don't know if we should claim the income. If we claim the income we will have an extra $100 per month after taking off the expenses including the mortgage interest. Therefore I don't see the benefit
of claiming this income.

The expenses that I have taken into consideration are mortgage interest, taxes, utilities and I have only used 30% of these since this is the percentage of the house that is the basement suite.

david ingram replies:

Believe it or not, it is a criminal offence to file your tax return without reporting the rental income.

It is up to you to claim the rental expenses. You should file a T776 and report the net income or loss on line 126. If there is a profit, you will pay tax. If there is a loss, you will get a refund. Refunds are good.

Find form T776 at: http://www.ccra-adrc.gc.ca/E/pbg/tf/t776/t776-01e.pdf

For more information about rentals, goto www.centa.com, click on tax guide and click on rental income.

Hope this helps

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