Scenario: You have a spare room or basement suite. One of you thinks renting it out would help with the mortgage. The other isn't sure they want a stranger in the house. How do you decide?
The decision: do we become landlords?
Before discussing income splits, agree on whether to rent at all. This is a lifestyle decision as much as a financial one.
Questions to discuss:
- Are we comfortable with a tenant sharing our space?
- What kind of tenant are we open to? (Student, professional, family member, short-term/Airbnb?)
- Who handles landlord responsibilities — finding tenants, maintenance calls, conflict?
- What's our minimum acceptable rent vs. our ideal?
- What are the legal requirements for landlords in our province?
When co-owners disagree
If one person wants to rent and the other doesn't, you'll need to find common ground. Options:
- Trial period: Agree to try it for 6-12 months and reassess.
- Conditions: Agree to rent only if certain conditions are met (e.g., long-term tenant only, no Airbnb).
- Compensation: The reluctant person might agree if they get a larger share of rental income.
What you shouldn't do: One person unilaterally deciding to rent out space.
How to split rental income
Option 1: By ownership percentage
If you own 50/50, you split rental income 50/50. If you own 60/40, you split 60/40.
Pros: Simple, consistent with ownership.
Cons: Doesn't account for who does the landlord work.
Option 2: Offset shared costs first
Rental income goes toward mortgage/expenses before anyone takes a cut.
Example: Rental income is $1,200/month. You put it all toward the mortgage. Your individual contributions are reduced accordingly.
Pros: Reduces everyone's out-of-pocket costs.
Cons: No "extra" income to either person.
Option 3: Compensate the landlord
If one person does most of the landlord work (finding tenants, handling repairs, dealing with issues), they might get a larger share.
Example: 60% to the active landlord, 40% to the passive owner. Or a flat monthly "management fee" off the top.
Option 4: Hybrid
Rental income offsets costs first. Anything left over is split by ownership or effort.
How to split rental expenses
Being a landlord comes with costs:
- Advertising and tenant screening
- Repairs and maintenance (tenant-caused and normal wear)
- Insurance (consider landlord or rental property insurance)
- Potential vacancy periods
- Legal costs if there are disputes
Common approach: Deduct rental expenses from rental income before splitting. Net income (income minus expenses) is what you split.
What to agree on before renting
Write down your agreement on:
- Decision to rent: Both owners agree to rent out [room/suite].
- Tenant criteria: What kind of tenant, minimum lease term, etc.
- Income split: How rental income is divided (or used).
- Expense handling: How rental-related costs are paid.
- Landlord duties: Who handles what.
- Exit clause: How to stop renting (notice to each other, not just the tenant).
Basic landlord obligations (Canada)
Landlord-tenant rules vary by province, but generally:
- You must provide a safe, habitable space.
- You need a written lease (required in some provinces, recommended everywhere).
- Security deposits are regulated — know the rules in your province.
- Eviction requires proper process — you can't just kick someone out.
- Rental income is taxable — track your income and deductible expenses.
Before becoming a landlord, research your provincial rules or consult a professional.
Special case: Airbnb and short-term rentals
Short-term rentals have different considerations:
- Municipal rules: Many cities restrict or require permits for short-term rentals.
- More work: Higher turnover means more cleaning, key handoffs, and guest communication.
- More income (maybe): Higher nightly rates, but also more vacancy and expenses.
- Insurance: Standard home insurance may not cover short-term rental guests.
If considering Airbnb, check local regulations first.
Practical takeaways
- Both co-owners must agree: Renting is a joint decision, not unilateral.
- Agree on income split before listing: Ownership-based, cost-offset, or effort-based.
- Document your arrangement: Tenant criteria, income split, expense handling, duties.
- Know your obligations: Research landlord-tenant rules in your province.
- Track income and expenses: You'll need this for taxes anyway.
How Partnered helps
Partnered can track rental income and expenses alongside your regular shared costs. You'll have a clear record of what's coming in, what's going out, and how it affects your overall financial picture.
Education only — not legal or tax advice. Landlord-tenant laws vary by province. Consult a professional for your specific situation.