[cammy]

Hi everyone
I am new to Profile and having trouble with inputting rental income for a common-law couple who live in 50% of rental unit.
I'm trying to divide the net rental income between him and her and the system tells me to "remove override on %of partnership field for business statement to calculate correctly on spouse's return." Not sure what to do? I'd appreciate any help!
Cammy Tibbo

[Dink Meeker]

On Schedule 776 in "details of co-owners and partners" enter the percentage of ownership. No override should be necessary. Make sure the returns are coupled. You only need to enter information on one schedule. The partner's schedule will populate the fields from the original 776.

Oh.... and remove the override on % of partnership field on the spouses return.

[ChrisG]

cammy, on 03 April 2011 - 09:31 AM, said:

Hi everyone
I am new to Profile and having trouble with inputting rental income for a common-law couple who live in 50% of rental unit.
I'm trying to divide the net rental income between him and her and the system tells me to "remove override on %of partnership field for business statement to calculate correctly on spouse's return." Not sure what to do? I'd appreciate any help!
Cammy Tibbo

Just curious. What software did you switch from?

[Tim Parris]

One thing to be aware of, the CCA calcs may not function in the manner you expect. If you know the rules, you should be able to set up the summary correctly.

[dunner]

Technically this is not a partnership since partnerships are for business. This is more likely a co-ownership situation so you should be entering the 50% ownership share at the end of the T776 in the area called "Details of other co-owners and partners". The capital cost amounts should be split and shown 50/50 on each spouse's T776. This is another difference between the partnership and co-ownership. The property is not owned by a partnership and CCA taken at that level. The owners each own an undivided 50% share and can take CCA on their own returns based on their own circumstances (subject to the ITA restrictions of course). I have seen many rental property statements, even prepared by professional accountants, prepared inoorrectly on the basis of partnerships (I assume because it's easier to prepare that way).

[Peter@Intuit]

Welcome aboard, Cammy!

Dunner raises a good point about properly distinguishing between whether the rental property is held as a co-ownership versus a partnership as that may affect how much CCA that can be claimed in certain circumstances.

Designation of co-ownership or partnership is found immediately below the Identification section of the T776 (checkbox defaults to co-ownership).

CRA guide T4036 provides some initial guidance to help in making this determination: http://www.cra-arc.g...html#P251_21328

Are you a co-owner or a partner of a partnership?

Most of the time, if you own the rental property with one or more persons, we consider you to be a co-owner. For example, if you own a rental property with your spouse or common-law partner, you are a co-owner.

In some cases, if you are a co-owner, you have to determine if a partnership exists. A partnership is a relationship between two or more people carrying on a business, with or without a written agreement, to make a profit. If there is no business in common, there is no partnership. That is, co-ownership of a rental property as an investment does not in itself constitute a partnership. To help you determine if you are in a partnership, see the partnership law for your province or territory. For more information, see Interpretation Bulletin IT-90, What is a Partnership?

Peter