Renting A Suite in Your Home - Sutton — Canadian Real Estate Listings & Agents | Sutton.com

Renting A Suite in Your Home

21 December 2018
Sutton

A legal rental suite can be an excellent income generator. The 15-year, nationwide trend toward lower rental vacancy rates means that good quality accommodation is in high demand. According to the most recent data available from the Canadian Mortgage and Housing Corporation (CMHC), the national average vacancy rate is less than four percent, while these Ontario cities have vacancy rates less than two per cent: Oshawa, Peterborough, Toronto and Kitchener. The rental market is even tighter in British Columbia; Abbotsford-Mission, Kelowna, Vancouver and Victoria have rates less than one per cent.

Taxation is one method that the federal government is using to encourage rental availability. Revenue Canada allows landlords reduce taxes on their rental income through a wide range of deductions, including:

  • Advertising to find a renter
  • Insurance
  • Interest (such as mortgage interest)
  • Professional fees (includes legal and accounting fees)
  • Property taxes for the portion of the property occupied by the rental
  • Repairs and maintenance (except for the value of the landlord’s own labour)
  • Utilities for the portion of the property occupied by the rental

As a landlord, be sure to keep good records because if you are audited and you cannot produce a receipt, Revenue Canada may disallow your claim, and even apply a penalty with interest. Save records of rental income, expenses and lease agreements and, if possible, scan and save a digital backup of these documents.

How much can you expect to earn in rental income? The best way to determine a suitable rental rate is to look at similar listings in your neighbourhood. As well, CMHC produces an annual Rental Market Report for nearly 40 major Canadian communities. In general, rental rates start at $750 for a small suite and can climb from there depending on the quality, size and location. In Toronto, such a unit may rent for $1,400 or more generating a gross annual income of $16,800.

Do you love animals? Many renters with pets find it difficult to find rental accommodation. By allowing pets, you can improve the odds of renting your property and may attract a loyal, long-term renter. To protect your property from damage, most provinces allow landlords to ask for a pet damage deposit.

Once your suite is ready to rent, advertising options include: community newspapers, online classified sites, and bulletin boards at libraries, grocery stores, laundromats, student campuses and organizations that offer housing assistance.

Showing your suite and interviewing potential renters is an opportunity for both parties to decide if they wish to enter into a lease agreement together. As a landlord, you can legally ask prospective tenants about their income, place of employment, number of people who will live in the unit, and whether they smoke. You can obtain written permission to conduct a credit check and check references, including previous landlords.

According to CMHC, landlords cannot legally refuse to rent to people with children and they also cannot ask:

  • Questions that infringe on a tenant’s Human Rights as outlined in the Code for their province
  • If there are plans to have (more) children
  • About a tenant’s ethnic background, religion, or sexual preference
  • If family will be visiting
  • For a Social Insurance Number
  • If the tenant is married, single or divorced.

Most provincial governments have a rental tenancy branch, which serves to protect both landlords and renters. Their websites display legislation and provide helpful forms such as lease agreement templates.

In general, a lease should stipulate the following:

  • The names of the landlord and tenant(s)
  • The address of the rental property
  • The agreed-upon monthly rent, with or without utilities, parking, cable, etc.
  • When rent is due each month
  • The amount and terms of the deposit (if applicable)
  • Which repairs are the renter’s responsibility
  • The term of the rental period, typically one year (but may be month-to-month or week-to-week)
  • The notice period required to terminate the lease
  • Subletting rules
  • Restrictions such as no boarders, pets, smoking, waterbeds, etc.
  • When and how a landlord can enter the premises
  • Conditions for termination of a lease
  • Terms for dispute resolution: late payment, damage and repairs, eviction, etc.
  • Emergency contact information for both the tenant and landlord (including phone, fax and email)

Lastly, be prepared to respond quickly to protect your property in the event of mishaps such as a flood, a leaking roof, sewage backup, or other mishaps.

With careful planning and a fair-minded approach, homeowners can enjoy years of nearly effort-free rental income.