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Beginning with the 2024 calendar year, CRA no longer allows expenses to be deducted for non-compliant short-term rentals<\/strong>. What does that mean? Glad you asked! Here are some base definitions:<\/p>\n A short summary of these regulations would read \u2013 if you are not compliant with municipal\/provincial licensing requirements, CRA can deny ALL<\/strong> expenses related to your STR income.<\/p>\n If there was a change in compliance during the year (i.e. you received licensing part way through the year to become compliant), expenses can be partially deducted \u2013 pro-rated for the period of the year that the STR was compliant.<\/p>\n **Note that it does not matter when the expenses were incurred (during compliant or non-complaint periods) \u2013 expenses are strictly pro-rated based on the portion of the year where the STR was compliant.<\/em><\/p>\n The 2024 calendar year has transitional relief, which means that if the STR was deemed compliant by December 31, 2024, all expenses for the year are deductible, regardless of when the property became complaint during the year.<\/p>\n CRA information on the new rules can be found <\/strong>here<\/strong><\/a>.<\/strong><\/p>\n As part of this initiative, CRA has also implemented new rules on digital platforms such as VRBO and AirBnB, which are now required to report information to CRA on an annual basis.\u00a0 This potentially includes the name, address, date of birth, tax identification number, address of the property, amount of rent received, etc. by the \u2018Host\u2019 or owner of each property on those services.<\/p>\n Digital platforms are responsible for ensuring the information they report is \u201creliable\u201d and must report this information to CRA by January 31 for the preceding calendar year.<\/p>\n Information on new requirements for digital platform reporting can be found <\/strong>here<\/strong><\/a>.<\/strong><\/p>\n It is now critical for tax purposes that you are compliant with your municipal and\/or provincial regulations on STRs.\u00a0 This may include licensing, inspections, application fees, police checks, etc.\u00a0 Failure to be compliant could lead to all rental expenses being denied by CRA<\/strong>, which could have a significant tax cost.<\/p>\n Listed below is a summary of select local municipality STR regulations available at the time of writing.\u00a0 This list is not comprehensive<\/strong> and you should contact your municipality and\/or province in order to ensure you are compliant with all necessary regulations:<\/p>\n\n
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What does this mean for you, someone who is renting property on a short-term basis, especially through a platform like AirBnB or VRBO?<\/strong><\/h3>\n
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