How to be a good Airbnb host in the eyes of the CRA
Being an Airbnb host is much more involved than ensuring you have toilet paper stocked and clean sheets on the beds – but trust us that it will be appreciated that you do! If you were one of the 55,000 Airbnb hosts in Canada last year, you are a part of the shared economy. Has a nice ring to it, doesn’t it? There are a few things you need to be aware of however, as this will now impact your tax situation. Don’t worry, it’s not as scary as you think, plus we’re here to hold your hand throughout the process.
Report your income
Whether you’re raking in the cash daily, or listing your place on Airbnb just once or twice a year, you have to report any income earned to the Canadian Revenue Agency (CRA). Airbnb hosts must report their total net rental income on T776 Statement of real estate rentals, which is included as a part of your income on your T1 tax return.
Register for GST/HST
Short-term residential rentals like Airbnb, differ from long-term rentals, which aren’t subject to GST/HST. Rentals of less than one month are subject to GST/HST if the rent charged is more than $20 per day. So, depending on how cheap you are listing your place for, you may have to charge tax. However, you are only required to charge tax if you are a GST/HST registrant and you’re only required to register for the GST/HST program if your gross revenues exceed $30,000 in the last four calendar quarters. Still with us?!
Get money back in your pocket
Now for the fun part – how to get money back in your pocket come tax return time. If you are renting out your full home, you can claim a pro-rated amount of your expenses based on the amount of time you are renting it out and the amount of time you are living in it. Expenses like utilities, mortgage interest, property taxes and maintenance can all be considered. If you are renting just a portion of your home, like a room or a suite, then you would have to do a further proration based on the square footage of the space. For example, if you have a 3,000 square foot home and your rental suite is 300 square feet, you can claim 10% of your expenses.
Keep a paper trail
We can’t say this enough: please keep records of your income and expenses and be sure to hang onto receipts, invoices, contracts and other relevant documents. Remember, receipts must include a description of the goods or services purchased, so make sure you are keeping the full receipt with your purchases opposed to the ATM transaction slip or credit card slip.
A tax expert at H&R Block can speak to tax implications of being an Airbnb host. Find an office near you.