Can I defer rental property income to my spouse?

[hollywood_wayne]

My wife and I have been married for over two years.  We currently have two income properties based in Ottawa and both of which are solely in my name, and the mortgages are in my name as well.  My issue is that my wife is now at home as a homemaker and I want to be able to defer all the income property income and deductions through her in order to lower my tax bracket.  Is this even possible since everything is in my name… after all she is my wife/partner.

[Delphision · Accepted solution]

Per CRA:

Who reports the rental income or loss?

The person who owns the rental property has to report the rental income or loss. If you are a co-owner of the rental property, your share of the rental income or loss will depend on your share of ownership.

Report the rental income the same way for each year you own that rental property. In other words, you cannot change the percentage of the rental income or loss you report each year unless the percentage of your ownership in the property changes.

Also:

This bulletin discusses a comprehensive set of rules intended to prevent a taxpayer and the taxpayer's spouse from splitting income from property so as to reduce the total amount of tax payable on that income. Except where fair market value consideration is paid by the spouse or the parties are living separate and apart by reason of a breakdown of their marriage, income earned and capital gains and losses realized on property transferred or loaned from a taxpayer to the taxpayer's spouse (and on property substituted for that property) are generally deemed to be the income, gains or losses of the taxpayer and not of the taxpayer's spouse.

http://www.cra-arc.gc.ca/E/pub/tp/it511r/it511r-e.html

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You might get away with a 50/50 split IF you can prove that she is 50% responsible for the repairs, rent collection, bookkeeping, and receives half of the income.  Changing your rental percentage is likely to raise a red flag at CRA.