Tax credits when renting property from a family member
There is a lot to unpack with your question, Satyesh, but I will address your direct question right off the bat.
If you rent real estate from a family member, if you both treat it as a legitimate landlord-tenant relationship, you may be able to claim a tax credit just as if you were renting from a third party.
Ontario has an energy and property tax credit, Quebec has a solidarity tax credit, and Manitoba has a residential renters tax credit. Each of these has a rent component and may result in tax savings for lower income taxpayers.
Your daughter would report the rental income and deduct applicable expenses like property taxes, insurance, utilities (if she pays them) and mortgage interest (if applicable). It bears mentioning that she may end up paying more tax on the net rental income than you would save on the tax credit.
Tax implications of a property transfer between family members
If you transfer your home to your daughter, the transfer will take place at fair market value, even if she does not pay you for it. Assuming the property qualifies as your principal residence, then you will not pay any tax on the transfer. You must report the disposition on your tax return, Satyesh, in order to claim the principal residence exemption.
If your daughter is not living in the home with you, it will not qualify as her principal residence, so it will be subject to capital gains tax for her in the future. This is one reason to reconsider the transfer. It begs the question: Why transfer the property to your daughter in the first place?
Probate fees paid upon death
You may want to transfer the property to your daughter to avoid probate fees on your death. However, probate fees, which allow your executor to distribute your estate in accordance with your will, are not a significant expense. It can range from nothing to a maximum of 1.695%, depending on the province.
Options other than transferring the property
If she is going to buy it from you so you have cash for retirement, that could make sense. You could even give her or lend her some of the money to buy it from you. In other words, if the property was worth $500,000 and she gave you $100,000, you could take back a $400,000 mortgage for the balance.