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My question is: Applicable to both US and Canada
QUESTION: I am closing on my first home tomorrow. I planned to rent the home
to a family member for a period of one year. However I did not make this
purchase as an investment property, but do plan on moving into the home at
the end of the one year period. I sit legal for me to rent out this
property?
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david ingram replies:
You may rent the house out. However, if it is rented at below fair market
value to a family member, you can not claim a rental loss. The good news is
that if you do not have another house, you should be able to claim this one
as your tax free principal residence because you bought it to live in and a
family member is inhabiting it. No guarantees, but get a good look at the
regulations when you sell it.
I am not sure what country you are in. In Canada you may rent a principal
residence out for up to 4 years without losing its tax free status., In the
US you must live in it for 2 full years out of 5 although there are some
benefits with less than two years if you moved out because of circumstances
beyond you r control such as a job loss, job transfer, death, birth of
twins, etc..
Answers to this and other similar questions can be obtained free on Air
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