Does a senior citizen have to claim rent as income that he gets from his daughter if less than $150/month?

Question

My uncle wanted me to check this out for him. His daughter is over 30 and living at home and pays 150 a month rent to him. He was on a disability pension before he turned 65 and up til that point was told he didnt have to claim it. Now that he is 65 and on the Old Age and CPP benefits we need to find out if he now has to claim that as income? He lives in Canada. please help!

Answer 1

Regardless of age, there are several issues here that need to be reviewed.

The key question is whether or not your uncle is "renting" the space to his daughter at what is considered "fair market value". And, does the uncle have a written agreement with his daughter as to the terms and conditions under which she is OBLIGATED to pay rent.

And, more importantly, is your uncle and his daughter dealing at arms' length? Would he rent out the space to someone else for the same price if they were NOT a relative?

If the 2 parties have a written agreement, lease, or tenancy agreement, then there is no question that the money must be reported by the uncle, and can be claimed as as Ontario Tax Credit by the daughter on their tax returns.

The daughter should have documented proof of paying her rent too under the Ontario Rental Tribunal rules, i.e., rent receipts issued by her uncle.

What would happen if, let's say, one month, the daughter decided not to pay the $150.00? Does the uncle have legal recourse to enforce this agreement?

If there is no agreement, then there is no way the daughter can make a claim for rent as an Ontario tax credit on form ON479 of her tax return. She may be contributing towards the cost of groceries, utilities, etc, which, cannot be claimed as rent.

You don't mention in your question how long this "agreement" has been in place for. But I can say this much, if the daughter makes a rent claim, she will need documented proof to support what she is claiming on her tax return. The way I see it, there is no claim at this point, since there is no proof that she pays her uncle.

Now, setting the daughter's situation aside, the flip side of the coin is, does the uncle need to report this income on his tax return?

Generally speaking, if it isn't a deduction to the daughter, then it is non taxable to the uncle.

However, if the uncle is receiving social assistance or other types of monies provincially, he may be required under those conditions to report this to the payors, since the money he receives from his daughter may be considered as "income" for eligibility purposes.

I hope this information helps you.

Answer 2

Every province has property tax credits for both owners and renters. I suspect that your uncle receives the senior's credit because his income is so low.

Your cousin's income may be too high for her to claim a property tax credit for rent paid to her father. If she IS claiming, give her a smack for me since your uncle has way more need than any 30-something-year-old who is still living at home (assuming, of course, that she is healthy).

Does your uncle's community have the free volunteer tax preparation program? These folks use computer programs that can advise Seniors (and the disabled) and will crunch numbers to provide the best way to file. Ours is run out of the library.

Answer 3

It depends on the situation.First , all citizens of the usa have to report income coming in to them no matter what.If he claims his daughter as a dependant then he does not report her money as an income because he supports more than 50 percent of her needs or vise/versa.Secondly, if he does not report her as a dependant -yes- he has to report this as a income because it is a support to him and plus any other incoming from public assistance or government.Even if he is living outside the country.Again you are still a citizen you have to report taxes even if you live out side the country.This is the foreign tax such as rent from others or property sold or rented outside the country and any bank interest etc from foreign savings or accounts.Unless he has paid a tax to that country for the property income or work income etc he receives there in that country.Usually a public notary outside the USA determines what the taxes are .Sometimes you even get credit in your income where it may reduce your total owe on taxes or may not affect anything at all.Alot of cash recieved is taxed based on a percentage recieved because it is never taxed but in his situation is not to be taxed any way because its a welfare or gift. Usa government taxes gifts as well. It depends like I said how you report it.If retired I know you are in a limited income and you cant really include extras because it reduces your pay but in any case as long as she don't go back and report her father as a temporary dependant etc. He should be fine.Later if she does most likely he pays back which will stop future pays or reduces the check amounts he already recieves.Also check with your local government in canada see what their provisions and laws are.

Answer 4

If one person claims the payment of rent for say, a state credit, then the landlord must claim it as income. The chances are, however, that his income won't be enough to be taxable. If she's not claiming a deduction for the rent, then there is no reason form him to claim it as income.

Answer 5

As long as he doesn't claim deductions for the property that she is renting as a business expense, then he doesn't need to claim any income from the property.

Answer 6

only if she is claiming it on her tax return, look at the return, there is a section in which renters are to put in their landlord or municipality, and the canadian government does check up with rents so he has to claim if she is claiming for a rental tax credit, but if she doesnt then he doesnt.

Answer 7

IN THE US WE ARE SADDLED WITH IRS!I WOULD SUGGEST CALLING THE EQUIVALENT IN YOUR COUNTRY AND ASK THEM. THAT OR TALK TO AN ATTORNEY THAT DEALS IN TAX MATTERS.(FOR A FEE OF COURSE)THOSE VULTURES STILL CLAIM "A LAWYERS ADVICE IS HIS STOCK IN TRADE"

Answer 8

kings ransom i think you report it and they take that much out of your check best to let sleeping dog`s lie and not report.or you could ask your accountant