Income from Airbnb and rental platforms

Short-term rentals that you can book on platforms such as Airbnb are a growing trend in Canada. However, many property owners are still unaware that income generated from this rental type is taxable, even in the absence of a traditional lease. 

Regardless of: 

• The amount earned; 

• The rental frequency; 

• Whether you rent a room, basement unit, chalet or your principal residence. 

All income generated from rental platforms must be declared in your annual income tax returns. 

There is no minimum threshold for taxable rental income. Even renting property for a few nights every year must be declared. 

In order to avoid nasty surprises, we created a list of the most frequently asked questions regarding income earned from short-term rental platforms. 

1. Do I have to declare this income even if I don’t have a formal lease? 

Yes.
As far as the Canada Revenue Agency (CRA) is concerned, income is considered taxable even where there is no formal lease. 

Therefore, a short-term rental is taxable even if: 

• no lease was signed; 

• you rent your property occasionally; 

• you use the platform on a part-time basis. 

2. Rental income or business income? 

The income category depends on the services offered rather than the platform used. 

 Rental income (the most common category) 

Income from renting on Airbnb is generally considered rental income where you: 

• rent out a unit or part of a unit; 

• offer only basic services (furnished accommodation, electricity, heating, Internet). 

Business income (certain categories) 

Your income may be considered business income if you offer hotel-style services such as 

• frequent housekeeping during the stay; 

• meals; 

• a personalized welcome or additional services. 

In this case, the activity is similar to an accommodation business. Therefore, income must be declared as business income (Form T2125), which can lead to additional obligations such as contributing to the Canada Pension Plan (CPP). 

3. Which expenses can you deduct? 

Declaring your income also allows you to deduct certain rental expenses such as 

• mortgage interest (but not capital); 

• municipal taxes; 

• insurance; 

• public services (prorated); 

• maintenance and repairs; 

• cleaning expenses; 

• expenses paid to Airbnb or another rental platform. 

Where only a portion of the unit is rented or your rental is not year-round, expenses must be calculated on a prorata basis. 

4. Do I have to register for GST and QST? 

This depends on your situation. 

• If your taxable income exceeds $30,000 over four consecutive calendar quarters, you must register for GST and QST.  

• Below that threshold, registration is not generally required. 

In several provinces including Quebec, Airbnb collects and remits GST and QST and/or tax on lodging for hosts who have not registered. However, the fact that the platform collects taxes does not exempt you from declaring the income in your income tax returns. 

Once you exceed the threshold or the activity is considered a business, your tax obligations will change. 

5. What happens if I don’t declare rental income? 

In the short term, failing to declare your rental income can lead to: 

• tax reassessments; 

• penalties and interest; 

• requests for retroactive payments. 

Ever since rules governing digital platforms were introduced, Airbnb is required to transmit certain tax information to the CRA. As a result, the tax authorities may compare the amounts declared on the platform with those reported on your income tax returns. 

In conclusion 

• Income from short-term rentals is always taxable. 

• You may have tax obligations even where there is no formal lease. 

• The income category depends on the services offered. 

• Certain expenses can be deducted. 

• Rental platforms transmit an increasing amount of information to the tax authorities. 

Any questions?

Contact us at 1-844-200-TAXO (8296).
Our team is here to help you and make your tax season easier and stress-free.