1

I own a condo unit with siblings, which we rent out. The unit was purchased for eventual habitation by parents, when they are older and need to be close. We are still paying mortgage on it.

Canada Revenue Agency's (CRA's) T776 form for rental income distinguishes between co-ownership of a rental unit versus a partnership. I haven't found a non-expert explanation of the distinction. CRA's Ownership page says some things about partnerships, but those things seem to apply to ownership as well. Nowhere is it explicit about the general idea behind the distinction.

The webpage also cites a much more technical document Income Tax Folio S4-F16-C1, What is a Partnership?, but I don't find it helpful at all.

I'm not looking for a technically defensible definition. Just the guiding idea of why the distinction is even made.

7
  • I think that's a legal question, and would probably get better answers in the law section of Stack Exchange than here.
    – keshlam
    Dec 19, 2022 at 0:44
  • OK, thanks. Since I'm only looking for the motivating idea rather than the technical definition, I'd like to wait a while and see if anyone can chime in. I have a phobia of legal technicalities. Dec 19, 2022 at 1:15
  • The definition seems to depend on the province, CRA doesn't define what it is.
    – littleadv
    Dec 19, 2022 at 1:27
  • 1
    I suspect -- but have no evidence -- that the difference is one of whether there's a contract explicitly defining percentage ownership, rights and responsibilities of each of the parties. and that sort of thing.
    – keshlam
    Dec 19, 2022 at 1:41
  • 1
    @user2153235 one reason for the distinction is that co-ownership implies partnership, but partnership doesn't necessarily imply co-ownership
    – littleadv
    Dec 19, 2022 at 6:20

1 Answer 1

1

The distinction is made to accommodate the realities. As far as I can search and understand, I find there are different partnership laws in different provinces. In some provinces, this co-ownership might be treated as a partnership and in some, not. People choose to create partnerships for their benefit over just co-ownership like limited liability.

3
  • Thanks, Manish. I've marked this as the answer, but it's an answer in that it presents possibilities that make sense. Plausibilities. Dec 19, 2022 at 8:28
  • 1
    You're welcome. Like there could be partnership firms where the business of buying and renting properties is done. The element of "business" is the only criterion which distinguishes the co-ownership and partnership.
    – Manish
    Dec 19, 2022 at 8:56
  • 1
    And profit sharing also.
    – Manish
    Dec 19, 2022 at 9:36

You must log in to answer this question.

Not the answer you're looking for? Browse other questions tagged .