More and more people are looking to Airbnb and similar sites to rent property. If you are renting out your property, this could have unexpected tax implications.
Tenants
If you are using Airbnb as a tenant, the tax implications are fairly straightforward. You get a receipt from Airbnb, and if that trip was a business trip, then that receipt supports your rental expense on your taxes.
Landlords
If you are renting your property out on Airbnb (or sub-leasing property you rent on a part-time basis), that rent is considered taxable income. You will have to keep track of the income you earn, and all the expenses relating to the property.
HST
If you rent your property on Airbnb and are earning more than $30,000 a year in rent income, you likely have to register for HST due to the short-term nature of the rental. Not registering could result in significant penalties and a nasty surprise.
Principal Residence
Finally, if you also live in the property, there are certain tax considerations to look at relating to which expenses you deduct so you don’t jeopardize the preferential tax treatment of your principal residence.
If you have or know anyone who uses Airbnb, ensure they speak to an accountant to get proper advice before running into issues at tax time.
Ian Edmonds is a CPA, CA and CPA (NC) working in Toronto with small and medium-sized businesses, individuals, and not-for-profit organizations in Canada and the US to provide personalized, approachable tax and accounting advice and services and help people avoid expensive tax situations. Contact us now to set up an appointment.