Tax considertions for AirBnB rental income

This article was written by Alison Bergbusch, one of the accountants we work with when helping you find your perfect investment property. If you would like to learn more about vacation rentals in beautiful Victoria, British Columbia - give us a shout!

If you earn income from renting your property, you will need to report the gross rental income and related expenses on your tax return.

Reporting the Income

Commonly deductible expenses include: * Property taxes * Mortgage interest * Insurance * Utilities / Security * Maintenance * Property management fees * Strata fees

The income tax treatment of the expenses that you incur may vary depending on whether the expense is considered a current or capital expense. Current expenses being on-going routine expenses, such as electricity or insurance, that have a defined benefit period. Whereas, capital expenses generally give a lasting benefit or advantage and may be expensed over their estimated useful life, such as the addition of a new piece of furniture.

GST/HST

AirBnb rental income may be subject to GST/HST.

Typically, AirBnB rentals are short-term rentals that last for 30 consecutive days or less, and are considered taxable for GST/HST purposes. Whereas, long-term (over 30 consecutive day) residential rentals are exempt from GST/HST.

If your short-term rental revenues exceed $30,000 in a 12-month period, then you are required to register and collect GST/HST from your tenants on this income. If you remain under this annual revenue threshold, you can be considered a “small supplier” and are not required to register to collect GST/HST.

Keep in mind, if you register and collect GST/HST on your rental income, you may also be able to recover the GST/HST you paid out on your operating costs – which can offset the burden.

“If you earn income from renting your property, you will need to report the gross rental income and related expenses on your tax return.” – Alison Bergbusch

Conclusion

Beware! This is only the tip of the iceberg. The income and sales tax implications related to rental property operations can be complex and are unique in every situation. The consequences of an unplanned tax approach can cost you a lot of money! Whether you’re an aspiring property owner or have been a long term landlord, it can be very beneficial to seek the advice of a tax professional to ensure you’re making the most of your investment.