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My girlfriend is about to move into my house. We''ve agreed that she will pay me "rent" that amounts to half of my mortgage payment. The actual logistics of this confuse me:  
 
We plan on opening a joint bank account for shared expenses: Utilities, groceries, cable, etc. And keeping separate bank accounts for personal expenses: our cars, cell phones, hobbies, etc.  
 
So which account would my mortgage, property tax, and house insurance come out of? Is that personal or joint?  
 
Since the house is not owned jointly, the money for the mortgage shouldn''t come from the joint account... right? And I''m quite sure I will have to claim her rent as income, so should we take my mortgage and her rent from our personal accounts. But by becoming a "landlord", am I opening up a can of worms when it comes to tax time? I know some couples where, the home owner pays the mortgage and the other person pays the utilities, internet, etc. Is there any benefit to doing it that way instead?  
 
What about my house insurance? Does that even cover her belongings? Should she be paying that at all?  
 
And the property tax... if I''m getting the $700 Education Tax Credit, does she no longer qualify?  
 
Any financial advice is appreciated. We want this to be as fair and simple as possible.  
 
Edited by Mormac, 2017-05-08 14:55:24

Sounds like a roommate situation. In that case she would just pay you a room and board fee. You would be paying the mortgage, house insurance, and property tax. Usually a payment would cover a certain portion of those bills.  
 
I would talk with a lawyer about this situation. If you are together long enough you become common law, therefore by contributing to the house she could be entitled to an amount of equity paid into it.

This advice is from personal experience, it is NOT legal advice. You should continue to pay all of your household expenses including your mortgage, taxes, utilities etc. yourself (Do NOT change anything!). Your girlfriend should pay you an agreed upon cash amount that you apply towards these expenses (deposit to your account). I would recommend you NOT open a joint account for anything, just split day to day expenses such as groceries as you pay for them (stores will take 2 different debit/credit cards for one transaction). You will continue to get the Education Tax credit as you are the homeowner (nothing changes). She will NOT be allowed to claim it as it is only available once per residence (owner or renter, not both). DO NOT give her rent receipts because then you have to claim the rent as income and that's a can of worms that really isn't necessary since you're not really renting to her you just let her share your owned home. Be aware that legally at some point unless you have a legal agreement of some sort she becomes common law (I think it's 3 years but it could be different now).

This sounds like something Sheldon Cooper would be asking...seriously...this is all stuff you should be discussing with your girlfr....er, roommate.

Polly is right for the most part. However if you claim her rent as income you get to write off 50% of your current expenses. Not to mention the fact that if you don't claim it, it's tax fraud.

that it would be tax fraud because technically he's not renting to her as a "renter" he's just letting a girlfriend live with him and share expenses, that's how I would see it anyway. The issue would be at what point she becomes entitled as a common law spouse to some equity in the house. Think of it this way, if they live happily ever after and she becomes co-owner then none of the renter tax issues would even be considered. Also, it may sound simple that he can claim 50% of his expenses but the end result is much more complicated than that. He would end up having to claim a capital gain on any profit made (during the rental period) when he does sell his house. In the short run I wouldn't open that can of worms and in the long run she becomes co-owner anyways so that's what I based my advice on. As I mentioned it was NOT legal advice!

I would suggest you run this by your accountant for the best advise. a few thoughts come to mind: if she is renting her own room (not sharing your bedroom) she is a room mate regardless of the other "benefits" and you could claim the income as income and deduct a percentage of your taxes, property insurance, utilities. she could claim her rent on her income tax return. This would be appropriate. If she does not have her own room you would be common law and sharing expenses. no income to declare and no rent to be allowed either. There was a time I knew about the property tax rebate but those rules could have changed since I dealt with it 18 yrs ago. At that time the room rental would mean you no longer qualified for it. Once you have cohabitated for 3 yrs without child or 1 yr with child you would be considered the same as married and your will if you had one would be considered void. Your girlfriend would then be considered your wife if you died. This is where you should seek legal advise as to what you want to happen and whether or not you should have a contract written up. It would also protect you should the relationship go sour. Know this in advance, as ignorance can be an expensive lesson

I agree that you might want to check with an accountant to see what the current rules are regarding this, but this would not be a "room mate" situation if she's your girlfriend. When she moves in, you'd basically be in that 12-month waiting period prior to becoming common-law under the Income Tax Act.  
 
The definition of common-law is:  
 
"Common-law partner  
This applies to a person who is not your spouse, with whom you are living in a conjugal relationship, and to whom at least one of the following situations applies. He or she:  
 
-has been living with you in a conjugal relationship, and this current relationship has lasted at least 12 continuous months;  
 
Note  
In this definition, 12 continuous months includes any period you were separated for less than 90 days because of a breakdown in the relationship.  
 
-the parent of your child by birth or adoption; or  
- has custody and control of your child (or had custody and control immediately before the child turned 19 years of age) and your child is wholly dependent on that person for support."  
 
http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/prsnl-nf/mrtl-eng.html  
 
When I worked at CRA, the common practice was that we ignored any financial arrangements during that 12-month period because you were living as spouses. She is not a tenant because of the nature of the relationship ("conjugal"). I don't imagine that practice has changed as the definitions of common-law spouse and rental income hasn't changed since I last worked, but nuances in the interpretation of law might have changed; hence you might want to double-check.  
 
As for the financial arrangements, it's up to you. When my husband and I moved in together before we were married, we each maintained our own accounts and had a common account that our discretionary expenses went into - mostly money for groceries and gas, etc. That way, the mortgages from our places (we each owned houses), taxes, utilities, etc continued to come out of our individual accounts, and then we each transferred an agreed-upon amount into the common account. We did that to see how we would function sharing an account, as neither of us had ever done that before.  
 
It worked well for us, and within a year we had merged pretty much all our finances together.

PollyWolly said "This advice is from personal experience, it is NOT legal advice. You should continue to pay all of your household expenses including your mortgage, taxes, utilities etc. yourself (Do NOT change anything!). Your girlfriend should pay you an agreed upon cash amount that you apply towards these expenses (deposit to your account). I would recommend you NOT open a joint account for anything, just split day to day expenses such as groceries as you pay for them (stores will take 2 different debit/credit cards for one transaction). You will continue to get the Education Tax credit as you are the homeowner (nothing changes). She will NOT be allowed to claim it as it is only available once per residence (owner or renter, not both). DO NOT give her rent receipts because then you have to claim the rent as income and that's a can of worms that really isn't necessary since you're not really renting to her you just let her share your owned home. Be aware that legally at some point unless you have a legal agreement of some sort she becomes common law (I think it's 3 years but it could be different now). "

Totally correct and sound advice! Except it's 6 months to a year not 3 years I believe. Your insurance doesn't cover her items, she needs her own content insurance for that. But remember if by chance something goes south, you don't want the headache of non paid bills or having to change things back etc.

I would spend the few hundred dollars and have a legally drawn up a cohabitation agreement. Saves you thousands of dollars if your relationship with your girlfriend doesn't work out. Essentially, you leave with whatever you walked into the relationship with: exceptions i:nclude purchases made jointly.  
 
It sounds ridiculous to have a joint bank account if you have a "roommate" situation.  
 
If two people living together are in a relationship you claim your taxes together.

Common law is different depending on which legislation. For filing a tax return as common law, you'd be considered common law after cohabitation for 1 year, regardless of whether you have a child. For property division and splitting things down the middle it's 3 years of cohabitation unless there's a cohabitation agreement stating otherwise. If you've had a child, it's 1 year for property division only for what you've acquired while together, such as equity earned while cohabiting, RRSP's, etc, otherwise it's 3 years with no child.

Just a note there, pension entitlement begins after 6 months of living together, even before you would be considered common law.

If you don't want her owning half your house in 3 years, consider a cohabitation agreement before moving in. Otherwise if you split after the 3 year mark, it's as good as married and she can take you for half

it can be very complex. I would get a income tax specialist opinion, and a lawyers legal advise. there is the potential for a full can of worms when you open it.  
 
if you establish common law threshold she will likely have homestead rights that flow with the property even after you break up. meaning you may need her permission to sell even after a break up.  
 
enjoy your partnership just know just know the process

Thank you for sharing your knowledge and experience. I suppose I should clarify a few things:  
 
I try to speak clearly and factually on this site, to avoid misunderstandings. So pardon my Cooperism.  
 
My girlfriend is MY GIRLFRIEND and not a roommate. She will not be "renting a room" and I am not profiting from her "rent". We are simply splitting the living expenses.  
 
We HAVE talked about this, but we are unsure of the best financial arrangement, as we've both been stung in the past by making the wrong choices in these situations.  
 
We do plan on purchasing a home together and combining all of our money eventually, but at this point it makes more sense for us to live in my house, even if it is just for a year or two.  
 
Let me rephrase my question: Were you in a romantic relationship where one person moved into the other person's house? If so, what was your financial arrangement?

In my honest opinion.  
 
Keep everything in your name and continue claiming everything the same as you already have been doing. If you and her already discussed her helping out financially with whatever you agreed upon, then all she needs to do is give you the cash, send you an EMT, or if you bank at the same place, just transfer the money to your account.  
 
Worry about the tax implications later when it comes to common-law, though keep track of move in dates and such for that time.  
 
If you are worried about anything going south in your relationship, then do as others have suggested and both of you talk to a lawyer... get something drawn up on paper so neither of you get screwed over.

Mormac said "Thank you for sharing your knowledge and experience. I suppose I should clarify a few things:     I try to speak clearly and factually on this site, to avoid misunderstandings. So pardon my Cooperism.     My girlfriend is MY GIRLFRIEND and not a roommate. She will not be "renting a room" and I am not profiting from her "rent". We are simply splitting the living expenses.     We HAVE talked about this, but we are unsure of the best financial arrangement, as we've both been stung in the past by making the wrong choices in these situations.     We do plan on purchasing a home together and combining all of our money eventually, but at this point it makes more sense for us to live in my house, even if it is just for a year or two.     Let me rephrase my question: Were you in a romantic relationship where one person moved into the other person's house? If so, what was your financial arrangement? "

from most of us. You need to learn to ignore the idiots (as most of us who are actually trying to help do) and make the most of the sound advice. Knowledge is power....even though I still stand behind my original advice I learned a few things from the other posts. In short, keep your finances separate, check in with a lawyer regarding your girlfriend's entitlement and check with your insurance agent about her contents. I think your original questions were all answered pretty clearly. Good luck, I hope you live happily ever after and never need to fall back on the legal advice!

I would keep it simple. She should pay you a monthly or bi weekly amount. 1/2 of mortgage payment plus 1/2 of annual utilities and net property taxes. Then go halfers on groceries and keep separate accounts for personal expenses. No joint account. She could just bank transfer you every payday and one of you could transfer 1/2 of each grocery bill to the other depending on who paid. No sense needing her for every penny. You can't put a dollar value on love.  
 
Edited by bigmoe, 2017-05-09 12:09:21

What Bigmoe suggested is exactly how my fiancé and I do things and neither of us have a joint account. It's worked out perfectly for us with no issues to the other person.