Does renting a property to a family member below market rent affect whether I can deduct a loss?

Yes, significantly. Renting to a relative for less than fair market rent is one of the clearest red flags CRA looks at when deciding whether to deny a rental loss, because charging below-market rent suggests the arrangement isn't being run on a genuine, arm's-length commercial footing. If CRA concludes that's the case, it can deny the related loss, and in some situations restrict your deductions to no more than the rental income you actually received - meaning no loss at all, even if your real expenses exceeded the rent you charged.

This catches a lot of well-meaning landlords off guard, since renting to family below market is often done for personal reasons that have nothing to do with tax planning, such as helping a child or parent afford housing. But CRA's focus is on the commercial substance of the arrangement, not your motive for charging less. If maintaining the ability to deduct a loss matters to you, charging closer to fair market rent, and being able to document that the rent reflects a genuine market rate for a comparable property, meaningfully strengthens your position if CRA ever questions the arrangement.