If I am renting a room in my principal residence, can I deduct a percentage of the interest on the mortgage?

Question

I live in Ontario Canada, and I know the tax laws can vary from province to province

Answer 1

Kudos to my16paws and everyone else who's taken the time to answer.

Now onto the percentage you get to claim.

When you rent a room in a condominium or a house, you don't calculate the percentage based on the number of bedrooms in the dwelling. It's based on the number of rooms, including the living room, bathroom and kitchen, if you share these rooms with your boarder.

On these common areas, you would have to calculate how much time your boarder spends in these places.

Take a look at CRA publication T4036 and pay attention to the explanation of personal portion found on page ten.

Answer 2

Talk with a Canadian tax specialist.  Or an office of the tax service in your province.  The question you are asking is whether you can lower your rental income bill?

Answer 3

Be Care be very very careful.  The quick answer is yes you can deduct a portion of the mortgage, but the % is may not be 50% it depends if what the rental agreement is for the balance of the Condo. Also you will needed to do a rental statement every year and add the income/loss to your income on your tax return.

Most importantly, you have now have a change of use of  your principal residence to a rental property.  Record the day that you have made this change of use. This trigggers a deemed dispostion of the residence and the current value become the Cost of the rental property.   If you sell the propert then the full amount of the gain is not Tax Free anymore only the portion that you are using as the pricipal residence.

If in the future you deceide to stop renting out the property and again claim it as your Principal Residence again you will need to pay taxes on the increased value of the property while you had it as a Rental Property.

I would recommend that you DO NOT do this until you have consulted a Tax person and have a sound understanding of the Tax consiquenses  of these actions

Answer 4

Just a small correction to my16's answer.  All that is mentioned is true, but if you are renting out the property, then it all becomes true anyway.  In other words, if you're renting part of your property, you have already got the same tax issues.