Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
XXXXXXXXXX
Attention: XXXXXXXXXX
Dear Sirs:
RE: Reporting Limited Partnership Rental Income and Expenses
This is in reply to your letter dated July 15, 1993, requesting our interpretation as to how net rental income derived through a partnership interest, including a limited partnership interest, is to be calculated and reported for income tax purposes.
It is our view that a partner should report on line 126 (Rental income) of the T1 return his/her share of the rental income or loss derived through a partnership interest. The rental income or loss of the partnership is its net income or loss after deducting the expenses incurred by it. The expenses incurred by the partner do not enter in the computation of the partnership income or loss. However, the expenses incurred personally by the partner and directly attributable to the rental activities of the partnership should be deducted from the amount reportable on line 126 of the T1 return. The carrying charges and interest expenses related to the acquisition of an interest in the partnership, such as the interest on money borrowed to acquire the interest, are deductible in the computation of his/her net income by reporting the amount of these expenses on line 221 (Carrying charges and interest expenses) of the T1 return.
Only the net amount reported on line 126 of the T1 return will enter into the computation of the rental income or loss for the purposes of the "earned income" calculation in paragraph 146(1)(c) of the Income Tax Act.
We trust these comments will be of assistance to you.
Yours truly,
for Director Manufacturing Industries, Partnerships and Trusts DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch
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© Her Majesty the Queen in Right of Canada, 1993
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© Sa Majesté la Reine du Chef du Canada, 1993
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