Can I claim a loss when renting cheaply to a relative?
Renting to Family Below Market Rates. Canadian tax guidance, practical records to gather and questions to resolve before preparing your return with Arsen Accounting.
Request a quote →Arsen Accounting Services · Prepared October 29, 2026
Rental income: 10 questions for property owners · Browse the 100-article collection
The direct answer
A genuine market-rate rental with a profit expectation is different from subsidizing a family member’s housing. CRA generally does not allow a rental loss resulting from charging someone you know less than an unrelated tenant. Small contributions toward household costs may instead be cost sharing, with no rental income or expense claim.
Describe the actual arrangement
Explain who lives in the property, what is paid and which costs the occupant covers. Keep the agreement even if it is informal. A family member's monthly contribution may not have the same character as rent from an arm's-length tenant. The preparer needs to understand the purpose and terms before deciding how income and expenses should be treated.
Do not assume every shortfall is a rental loss
A below-market arrangement can raise restrictions that are different from an ordinary profit-seeking rental. Keep personal and commercial intentions clear and provide any evidence of market terms. If the arrangement changed during the year, record the dates. Do not use the mortgage payment minus family contributions as an automatic deductible-loss calculation.
What to gather before the review
- Written agreement or factual summary of terms
- Amounts received and costs paid by each person
- Market-rent information and dates of changes
Can I claim a loss whenever family rent is below my costs?
Not automatically. The nature of the arrangement and applicable rental rules matter. A family cost-sharing situation must be reviewed before reporting it as a commercial rental loss.
Your next step
Keep comparable market rents and explain the arrangement before treating the property as a loss-making rental.
Related reading
Official sources
Renting below fair market value
Sources checked for this collection on October 28–29, 2026. Annual forms may refer to a specific tax year. Use the rules and limits for the year being filed. General information; eligibility, elections and deadlines depend on the facts. No deduction or tax saving is guaranteed.
Let's discuss your tax needs.
Tell us the tax years, province and filing needs. Prepare a short quote inquiry or contact us directly to discuss availability and scope.
Email: elena@arsenaccounting.com
Phone: (647) 297-4126
Before you send
Please provide a brief description of the assistance you need. Do not email SINs, passwords, banking details or sensitive tax documents in your initial inquiry. We'll discuss an appropriate secure method of sharing documents if we proceed.
Information on this website is general and is not individualized tax advice. Engagements are subject to acceptance, agreed scope and applicable terms.