There seems to be a growing trend for seniors to live together. Historically associated with younger people, the phenomenon of sharing a residence appears to be drawing a new generation.
For some seniors, it’s an opportunity to avoid isolation and loneliness. It also has the benefits of being able to share interests and activities, without necessarily sharing their love life.
What’s more important, like teens and young adults, seniors see the significant advantage of sharing housing costs. In the context of their generally more limited income and with the constantly increasing life expectancy, living with someone is an appealing solution to deal with this reduced income.
Living together is seen as another option for balancing one’s budget.
Despite the undeniable benefits of shared housing, are there tax impacts? A reader recently had questions about how her plans to move in with someone would affect her tax situation. Let’s look at some of the considerations more closely.
After they have lived together for 12 months, two individuals of the same or different sex are considered to be common-law spouses and would therefore be required to change their marital status when filing their tax returns.
Since some tax credits are calculated on a family income basis, the change of status could result in the two individuals losing certain tax benefits. However, just the fact of being roommates does not trigger a change in marital status.
To conclude that roommates are common-law spouses, they have to have lived in a conjugal relationship for 12 months.
Tax legislation does not define a conjugal relationship, therefore, the facts underlying the relationship will generally determine whether two individuals are common-law spouses.
The tax authorities usually consider two individuals to be in a conjugal relationship if they live in the same residence, present themselves as a couple, declare themselves to be spouses for insurance or pension purposes, enter into agreements or loans together, have intimate relations, etc.
There is no dominant factor per se, all of the facts at hand must be analyzed to determine if roommates are common-law spouses.
The main point to remember is that simply living together is not sufficient to consider that roommates are spouses.
1. Roommates should ensure that they properly report the nature of their relationship to the tax authorities.
2. Having a roommate means you can no longer claim the tax credit for a person living along.
3. Misrepresenting the situation could lead to a review of your tax situation and the need to repay certain benefits.
Consult your tax advisor for help in assessing your situation.
This article was published in French in Journal de Montréal and Journal de Québec on 2018, February 27. Sylvain Moreau is Tax Partner and columnist for the Argent – Dans vos poches section.