Ask MoneySense: Income property

Maternity leave has its benefits but claiming rental income for your spouse isn’t one of them.

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From the September/October 2012 issue of the magazine.

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AskMoneySense_mom_322
Can I claim rental income on maternity leave rather than my spouse? And how much should we set aside for house maintenance each year? I’ve heard 3% to 5%, but that seems excessive.

—Céline Doré, Toronto

Maternity leave has its benefits—bonding with your baby and taking a mental break from work—but claiming rental income for your spouse isn’t one of them. “You can’t decide one year to the next who’s going to claim the income,” says Adam Scherer, a partner with Soberman LLP. But your husband may be able to pay you a salary to offset that rental income. The catch: you have to do something, say bookkeeping or paying bills, and be able to justify that salary. Plus, you’ll need the invoices to back it up. As for maintenance, unless you own a money pit, budgeting 3% to 5% of your home’s value is pretty steep—that’s upwards of $18,000 a year for the average home. Robert Koci, editor of Canadian Contractor, suggests that if you have a $1-million house that’s 100 years old you might assume $10,000 annually, whereas a new house might cost no more than $2,000. That’s in line with the Financial Consumer Agency of Canada’s recommendation of between 1% and 3% of the home’s value.

Got a question about your finances? Email us at: ask@moneysense.ca

2 comments on “Ask MoneySense: Income property

  1. It's not a totally silly question. And while you may not be able to claim it on your spouse, there is a way to make rental income on maternity leave so you have some extra income to hold you over (and then some). If you're interested, consider an income property investment. There are plenty of great and solid reasons to purchase one right now and investors all over are finding out just how lucrative a Canadian real estate investment can be. Better yet, come work with us and we'll even assure your rental income for a given period of time.

    Reply

  2. Great advice for us non-tax-ey people!

    Reply

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