Real Estate

Rental property maintenance: hiring own family member a legit business expense?

  • Last Updated:
  • Aug 22nd, 2021 6:39 am
[OP]
Deal Addict
Oct 3, 2004
2271 posts
282 upvotes
Calgary

Rental property maintenance: hiring own family member a legit business expense?

Hey guys, got a question regarding rental property.
I am renting my old place out and tend to do minor maintenance and repairs myself, but would need a helper sometimes.
I understand that I can't charge myself for the repair etc. only the parts used whatever.
Is hiring own family except my wife (who reports rental income on her tax return) eg. my own daughter considered a legit business expense?
If so, what kinda guideline should I follow?
TIA.
7 replies
Deal Addict
Mar 30, 2017
1185 posts
936 upvotes
GVA
renhui wrote: Hey guys, got a question regarding rental property.
I am renting my old place out and tend to do minor maintenance and repairs myself, but would need a helper sometimes.
I understand that I can't charge myself for the repair etc. only the parts used whatever.
Is hiring own family except my wife (who reports rental income on her tax return) eg. my own daughter considered a legit business expense?
If so, what kinda guideline should I follow?
TIA.
Just like how you would hire a subcontractor or employee to do work for you.

you need to pay her market rate based on her skill and experience (ie. min wage)
proof of payment required, ie write a cheque/etransfer.
cpp and tax withholding, deduction to remit, payroll number required + T4 filing requirements. (or GST paid and remit and GST return filed (or exempt) if she works with her own tools)
she need to report income in her tax return.
profit on 6/23/2021 = 117.61% since 11/10/2020 to be exact😎
Deal Addict
Mar 2, 2017
3230 posts
6174 upvotes
Toronto/Markham
renhui wrote: Hey guys, got a question regarding rental property.
I am renting my old place out and tend to do minor maintenance and repairs myself, but would need a helper sometimes.
I understand that I can't charge myself for the repair etc. only the parts used whatever.
Is hiring own family except my wife (who reports rental income on her tax return) eg. my own daughter considered a legit business expense?
If so, what kinda guideline should I follow?
TIA.
Why can't you bill for your own labour?
RE Broker
Member
Jan 16, 2021
321 posts
137 upvotes
RichmondCA wrote: Why can't you bill for your own labour?
I'm guessing the real intent is for tax strategy. Esp if he's the higher income earner. Billing him self would not result in much tax savings
Deal Addict
User avatar
Apr 12, 2013
2915 posts
1903 upvotes
Moon
Speak to an accountant but yeah its better if you do a 3-tier holding corp and actually have a company which would issue T4 etc... you want to be extra careful since property is "an area of interest" for the CRA.
Koodo, Public Mobile, Lucky Mobile Customer
Deal Addict
Mar 30, 2017
1185 posts
936 upvotes
GVA
SargeJ wrote: I'm guessing the real intent is for tax strategy. Esp if he's the higher income earner. Billing him self would not result in much tax savings
more like negative tax savings...
deduct wage in rental and include income in T4/T4A. it is a wash at best and you lose employer portion of CPP to CRA.
profit on 6/23/2021 = 117.61% since 11/10/2020 to be exact😎
Deal Addict
May 23, 2006
1521 posts
552 upvotes
Vancouver
It's fine to pay your relative to do the repair. Make sure it's a reasonable amount with invoice and actual payment.

Not sure why other advises on T4 or tax withholding. Your relative is clearly a contractor that requires none of these.
Newbie
Jul 27, 2020
81 posts
96 upvotes
Ask an accountant. I’m confused why some posts mention tax withholding and t4 when she would be paid as a sub contractor. As a sub contractor she is then responsible for tax implications and you are off the hook. Hopefully she’s done this before but just let her know to keep about 30% of the cheques value aside (generally it’s best to throw that money into stocks using a tfsa) to grow the fund and lessen the tax burden. Alternatively she can do 10% rsp and 20% tfsa or somewhere along those lines as a better strategy overall IMO. It’s just RSP you won’t withdraw you’ll essentially be paying yourself later down the line, and you’ll try and get the 20% as close to 30% in your tfsa come tax time. This strategy would be even better if she never bought her first home yet, but overall I am a fan of using both my RSP and TFSA as much as I can afford to put money in there. As a sub contractor as well she can write off a bunch of expenses and not pay as much tax too, just keep all the relevant receipts. Again, ask an accountant to make your best move here.

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