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Guide to Airbnb Tax Canada

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In the eyes of the CRA, any income earned by renting out your home or other property is considered to be rental income – even if it’s just for a night or two, every once in a while.  Like other types of income, the money you make from your rental must be reported to the government as income on your personal income tax return.  Before you have any second thoughts, keep in the mind the good news, that since you’re reporting the income, you are also able to deduct expenses related to that income. Lets Dig deep into Airbnb Tax Canada.

These earnings must be reported on your personal income tax return via these two forms:

Do I need to charge sales tax to Airbnb customers?

Up until recently, short-term rental platforms like Airbnb weren’t responsible for collecting sales tax on behalf of hosts. Hosts earning less than $30K a year didn’t have to charge federal or provincial taxes. But as of July 1, 2022, this tax loophole is closing. 

The onus is now on Airbnb to collect and remit Goods and Services Tax (GST), Harmonized Sales Tax (HST), and/or Québec Sales Tax (QST) for all hosts.

For hosts who are registered, it’s business as usual: collect and remit these taxes to the government on your next sales tax report.

How do I reduce Airbnb Tax Canada ?

The good news about your set-up and operational costs? There are expenses that can reduce your taxable income significantly. Items like bedding and kitchenware are fully tax-deductible. Other expenses, like property taxes and insurance, are partially deductible, according to the portion related to business use. 

Rental expenses you cannot deduct include your mortgage and the value of your own labour.

Plan Ahead for Airbnb Tax Canada

Even though keeping proper records is planning ahead too, this section warrants its own heading to bring attention to the fact that self-employed income does not have tax deducted at source as would occur with someone receiving a T4.  As a result, setting aside a portion of your Airbnb income each time you have a renter is a very good idea.  The general rule of thumb is to set aside 25-30% of the income you earn for taxes, but even setting aside 10% from each renter will help lessen the hit at tax time.

If you are looking for Personalized advice on how your Airbnb Rental Property is rented that you should get in touch with Abdullah CPA .

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