Renting a Room in Your Home in Ontario: RTA and Tax Rules

Renting a room in the home you live in can help with the mortgage and bills. It also raises two questions. Does Ontario's tenancy law apply to your arrangement, and how do you report the income and costs on your taxes?

This article covers both. The answers depend on the details, such as who uses the kitchen and bathroom and whether you rent to a relative. A lawyer or accountant can confirm how the rules apply to you.

When the Residential Tenancies Act applies

Under the Residential Tenancies Act, 2006 (RTA), landlords and tenants of most rental units are covered by most of its rules. Rental units include apartments, houses, and rooms in rooming or boarding houses.

There is an important exception for home sharing. The RTA does not apply if the tenant must share a kitchen or bathroom with the owner or with the owner's family members. If your tenant has their own kitchen and bathroom, or shares them only with other tenants, the exception may not fit and the RTA may apply.

The RTA has other exemptions too. Check the exact wording of section 5 of the RTA on e-Laws, or ask a lawyer, before you rely on an exemption.

What changes if the RTA applies

• Entry: you may generally enter only after giving 24 hours' written notice stating the reason, and only between 8 a.m. and 8 p.m..
• Vital services: you cannot shut off heat from September 1 to June 15, or electricity, fuel, or hot or cold water.
• Lease: most tenancy agreements first entered into on or after April 30, 2018 must use the Standard Form of Lease, and you must give the tenant a copy of any written lease within 21 days.
• Deposits: a rent deposit can only be used for the last month's (or week's) rent and cannot exceed one month's rent where rent is paid monthly.
• Rent increases: you generally need at least 12 months since the tenant moved in or since the last increase, plus at least 90 days' written notice, but a unit not occupied for residential purposes on or before November 15, 2018 may be exempt from the guideline, though notice is still required.

The Ontario Government sets the rent increase guideline each year.

Reporting your rental income

The CRA encourages landlords to report rental income and expenses on Form T776, Statement of Real Estate Rentals, although it also accepts other financial statements. Rental properties have a December 31 year-end, so you report income for the calendar year, January 1 to December 31.

Claiming expenses for part of your home

When you rent part of your own home, you can claim only the expenses for the rented area. Shared costs such as property taxes and insurance are split by floor area or by number of rooms.

CCA cannot be used to create or increase a rental loss. Land is not depreciable, so CCA can be claimed on the building but not on the land.

If you rent to a relative below market rent and expenses keep exceeding the rent, the CRA treats it as a cost-sharing arrangement and no rental loss can be claimed.

What to do next

• Check whether your tenant must share a kitchen or bathroom with you or your family.
• Read section 5 of the RTA on e-Laws to confirm whether an exemption applies.
• If the RTA applies, use the Standard Form of Lease and follow the notice rules.
• Measure the rented area and keep records of shared costs, so you can split them by floor area or rooms.
• Keep receipts for repairs, insurance and property taxes, and note any CCA decisions with an accountant.

For free help, the Landlord Self-Help Centre (for small landlords) and the Advocacy Centre for Tenants Ontario (for tenants) are funded by Legal Aid Ontario.

Frequently asked questions