Tax Laws in Canada on Short-Term Renting

Since the introduction of short-term rental services, regulations have been established by both the provincial and federal government to provide rules and guidelines for people wanting to participate on platforms like Airbnb.

One of these regulations requires you to declare your rental income to the Canadian Revenue Agency (CRA). The following will guide you on how to do so in order to remain compliant with the federal government.

How to declare your rental income?

Because of the demand for proper regulation, Airbnb works closely with the CRA and the H&R Block to help Canadians declare their income and to increase compliance in Canada for short-term rentals. There are two types of income to declare:

  • Rental Income: If you are receiving income from renting out your property, you need to file form T776 (Statement of Real Estate Rentals) and declare the income on line 126 of your federal return.
  • Business Income: If you provide additional services such as meals and laundry cleaning, you may be running a business venture rather than a rental one. In this case, you will need to file the following:
    • Form T776 on line 135, as part of self-employment income.
    • The Canada Pension Plan (CPP) premiums on net income.

If you have any additional questions that are still left unanswered, you can find more information by clicking here, or by visiting a tax professional.

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Sorting out expenses

There are two types of expenses to consider when renting out on Airbnb and that can be tax deductible:

  • Current expenses, which are ongoing-period expenses that don't necessarily provide a lasting benefit, such as electricity.
  • Capital costs, which generally have a longer lasting benefit or advantage.

To learn more about how to deduct these from your taxes, click here.

But wait, there's more!

Airbnb and other platforms alike are still fairly new, which is why the Canadian government's work on regulating and taxing such platforms is still ongoing, leaving some of the regulation and further taxation policies in the hands of provincial government's. You can read more on tax laws in Canada here. Make sure to inform yourself on the tax policies and other regulations in your area before embarking on a journey with Luckey!

We recommend that you do your own research as this article isn’t comprehensive, and doesn’t constitute legal or tax advice. Also, as we don’t update this article in real time, please check each source and make sure that the information provided hasn’t recently changed.

Ready to say goodbye to the hassles of managing a short-term rental and boost your property’s value?

Luckey and Airbnb
Since its purchase in December 2018, Luckey has become an Airbnb wholly-owned subsidiary.
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