Airbnb and Tax considerations

Short term rentals such as Airbnb are gaining in popularity so I thought it might be useful to look at the tax considerations. On a basic level any income that you make will be required to be reported on your tax return for the current year. Is Airbnb considered business income or rental income? This depends on whether you provide extra services in addition to just the basics of a place to stay and utilities (eg. heat, water & electricity). Extra services include doing laundry for guests, providing meals and cleaning services. Providing extra services will put you in the category as business income. The difference is that business income is subject to CPP on its earnings.

Another tax consideration is the need to prorate your house related expenses based on the number of days you had Airbnb income as well as the percentage of your home that you rent out. Common expenses that you can claim to reduce your taxes include utilities, property taxes, internet, mortgage interest, insurance, maintenance and repairs.

Long term rentals are exempt from HST however short term rentals of under 30 days are taxable for HST purposes if you exceed $30,000 of gross rents in a 12 month period. In this case you will need to register for an HST number and charge 13% HST. The HST collected needs to be remitted to the government less and HST you paid from house related expenses, advertising and professional fees.

If you would like an assessment on your personal situation please contact me to schedule a consultation.