Zero rent Tenancy lease agreement for a family member
If you let a family member (adult son/daughter) live rent free in your condo, should you still sign a Zero rent lease agreement and why?
Jul 5th, 2021 12:57 am
Jul 5th, 2021 4:22 pm
Jul 5th, 2021 6:45 pm
This is a very good point. A contract requires a proise for a promise. The RTA in Ontario and probably other provinces as well speak to a rent being the element that forms a lease. Rent per realtorhome is the tenant's consideration - their promise to the lanlord in return for the pronise of the premises, but it can be something else. Essentially unless your lease has that promise for a promise the tenancy may not be covered under the respective Tenancy Act.realtorhome wrote: ↑ A zero rent lease has zero consideration, for the lease to be valid, make it a $1 lease.
Jul 5th, 2021 8:10 pm
Jul 5th, 2021 10:21 pm
Doesn't sound like there's any benefit to the landlord in this case?realtorhome wrote: ↑ Depends on your relationship with the family member. If you sign a lease, they will have tenancy rights. If you don't, it doesn't mean they won't have tenancy rights as a verbal agreement is just as valid.
AFAIK, from contract law, an agreement is valid if there is consideration. A zero rent lease has zero consideration, for the lease to be valid, make it a $1 lease.
Jul 6th, 2021 12:03 am
Jul 6th, 2021 1:05 pm
So here is the scenarioFrancisBacon wrote: ↑ What if this person gets married?
What if they or their spouse refuse to move out (eg in case of divorce/breakup)?
What if there's a fire, water leak, etc (ie insurance issues)
Also there may be tax issues (eg if the property is held in a company).
Too many scenarios to give a blanket answer.
You won't be able to protect against all scenarios. You'll have to think about which risks you want to mitigate, and which you'll assume.
Then a good answer can be given.
Jul 6th, 2021 2:20 pm
Jul 6th, 2021 2:30 pm
Jul 7th, 2021 6:36 am
This is easy. Deduct and claim for the time it was rented. Same as if you were moving back yourself. I don't know why you would overcomplicate with a rental agreement. You certainly can't charge zero rent and deduct expenses but I think you know that.Redcoffee wrote: ↑ So here is the scenario
1) The condo was rented out to a tenant, who has now left after 6 months of 2021.
Since it was rented out all of 2020, I claimed the expenses, declared the rent and included it in my 2020 tax returns.
2) Now my adult son has moved in and will stay here for about 2 years while in University. After that, he will be moving out to wherever he gets a job.
I am not concerned about payments from him or to think of landlord tenant issues. I am providing him relief during his University years (I also paid his rent so far after he started university and was renting)
So now that I have a vacant condo, he can move in till he finishes his studies.
The real issue is, as I am not getting a rental income, I obviously cannot claim the expenses (management fee, interest and property tax) for the last 6 months in my 2021 tax return.
So how do I deal with this?
The condo generated rental income for 6 months and now will not do so for the rest of the year due to family member living rent free.
Jul 7th, 2021 9:44 am
Thank you very much. This appears to be the simplest solution.fogetmylogin wrote: ↑ This is easy. Deduct and claim for the time it was rented. Same as if you were moving back yourself. I don't know why you would overcomplicate with a rental agreement. You certainly can't charge zero rent and deduct expenses but I think you know that.