While you must claim this as income, you will also be entitled to claim some related expenses against this income that occurred as a result of your renting out this space. Perhaps the rent you are charging includes the utilities, for example. You can calculate what these costs are for the utilities and use them as an expense against the income you are collecting for the rented space.
Then perhaps you own a cottage and are trying to decide if you would be further ahead to sell it, or to try and glean some income from it by renting it, or maybe move into it and make it your primary residence, so you could sell your current one. Each of these decisions has some form of tax implication.
On the other hand if you make the decision to start renting it out as a potential source of income then now it becomes classed as rental property and comes under deemed disposition. In the eyes of the CRA you are looked at as having disposed of the property then immediately reacquiring it at fair market value. This can now have a direct effect on your taxes by way of capital gains, or perhaps a capital loss.
It may be frustrating for you when you have worked hard for your property and now you have to consider the tax implications that may arise from what you do with it, especially when you are not really selling it.
Be sure to check out our educational video on renting part of your home, as it will give you some greater insight.
