Caregiver Credit & "Rental" Income/cost Claim - Maintain a second home for elder parents & live there during weekend & receive some cash payment from parents

[crysti_weng2002]

We  have a second townhouse for my parents living (both over 65-year-old with low income <15K per person per year) .  My husband and I maintain the house (pay mortgage, property tax, utilities, insurance ...). We live there during weekend and do cooking, cleaning and laundry for my parents. My parents pay us $700/month in cash. (1) Can we claim caregiver credit ? (2) Can my parents claim the "rental cost" on their tax returns? (3) Can we deduct the "rental income" by the mortgage interest, property tax, and insurance we paid for the second home? (4) Will the "rental income" have any tax influence when we sell the second home one day? Will it be treated as a rental property? Thank you very much!

[Delphision · Accepted solution]

The main issue is that reporting the income on the residence as a rental property changes its use to a revenue property.  You would claim the income, report the deductions, and pay capital gains when sold.  Since family members are living in it, you probably won't have to report the income if the rent charged is below market rental rates.  This would be considered cost sharing rather than income.

You might slide by deducting the caregiver credit as you live there on weekends.  There is a risk of having CRA reassess based on the fact that your parents do not live with you full time.  You must also be seen to be supporting them, so reporting rent as income may not be wise.

You should discuss the potential results of claims one way or the other with a local accountant.