Educational information only, not tax advice. Rules and figures change — confirm your situation with a qualified Canada tax professional before filing.
Canada · Short-term rental taxes
Short-Term Rental Taxes in Canada
STR income is taxed as rental or business income on your federal T1 return, with GST/HST obligations kicking in once you cross $30,000 in revenue, plus provincial and municipal lodging levies layered on top — and since 2024, deductions are denied entirely for non-compliant rentals.
The 30-Second Answer
- All STR income is taxable: report every dollar on your federal T1 personal tax return — most hosts use Form T776 (Statement of Real Estate Rentals) for rental income, or Form T2125 if the CRA classifies your activity as a business.
- GST/HST registration is mandatory once your gross revenue from taxable supplies exceeds $30,000 in any four consecutive calendar quarters; Airbnb and Vrbo collect and remit GST/HST on behalf of unregistered hosts, but registered hosts must self-remit.
- Since January 1, 2024, expense deductions are fully denied for any period your property is a non-compliant short-term rental (operating without required provincial or municipal registration, licence or permit, or in a location where STRs are prohibited).
- Provincial tourism levies and Municipal Accommodation Taxes (MAT) add 3.5%–6% on top of GST/HST depending on your province and city; major platforms auto-collect many of these, but hosts must verify their own municipality's rules.
Deductions
What You Can Deduct from STR Income
Compliant hosts can deduct reasonable current expenses incurred to earn rental income; capital costs are recovered through CCA (depreciation). Deductions are proportioned to the rental-use portion of the property.
Expenses must be prorated when a property is only partially rented or rented for only part of the year. Zero deductions are allowed for any days the property was a non-compliant STR (post-2023 rule). Personal-use portions are never deductible.
Filing Calendar
Key Dates & Filing Calendar
Canadian personal tax returns follow a calendar year; GST/HST filing frequency depends on your annual revenue.
Late filing or late payment triggers CRA interest (currently prescribed rate + 4%) and a 5% late-filing penalty plus 1% per additional month (up to 12 months). Non-compliant STR expense denials apply from January 1, 2024 onward.
Canada Revenue Agency — T4036 Rental Income guide; CRA GST/HST for digital economy (canada.ca)
Income Classification
Rental Income vs. Business Income: Which Applies to You?
The CRA determines how your STR income is classified based on the level of services you provide to guests. The classification affects which form you file and how losses are treated.
Rental Income
Passive accommodation — the most common classification for STR hosts
- Report on Form T776 (Statement of Real Estate Rentals) as part of your T1 return
- Net rental losses can generally only offset other rental income, not employment or other income
- Capital Cost Allowance (CCA) claimed cannot create or increase a rental loss
- Proportionate deductions apply when only part of the property or year is rented
No income ceiling — applies regardless of revenue amount
Business Income
Active operation with significant services — treated like a small business
- Report on Form T2125 (Statement of Business or Professional Activities) as part of your T1 return
- Business losses can offset other income sources (employment, investment) in the same year
- GST/HST registration threshold ($30,000) applies the same way
- Self-employment CPP contributions may be required on net business income
No income ceiling — classification is based on services, not revenue
Depreciation
Capital Cost Allowance (CCA) for STR Properties
Canada uses the Capital Cost Allowance system rather than straight-line depreciation. Assets are grouped into CCA classes with prescribed maximum annual rates; you claim CCA on your T776 or T2125.
| Asset | Typical write-off period | Notes |
|---|---|---|
| Rental building (brick, concrete, or frame) | Class 1 — 4% declining balance per year | Most residential rental buildings acquired after 1987 fall into Class 1. The half-year rule limits CCA to 50% of the normal rate in the year of acquisition. |
| Furniture, appliances & equipment | Class 8 — 20% declining balance per year | Includes beds, sofas, kitchen appliances, and similar furnishings used in the rental property. |
| Computer hardware & tablets | Class 10 or 50 — 30%–55% declining balance | Devices used to manage bookings or operate the rental may qualify; Class 50 (55%) applies to general-purpose computers. |
| Leasehold improvements | Class 13 — straight-line over lease term | Improvements to a leased property are written off over the remaining lease term plus one renewal period. |
CCA on a rental property cannot be used to create or increase a net rental loss (T776 restriction). The half-year rule applies in the year of acquisition and disposition. Always consult the CRA T4036 guide for current class rates.
When you sell a rental property, any CCA previously claimed may be 'recaptured' and included in your income in the year of sale. If the proceeds exceed the original cost, a capital gain also arises — 50% of the gain is included in income (inclusion rate; note: proposed changes to the inclusion rate should be confirmed with a tax professional).
GST/HST & Lodging Taxes
Federal, Provincial & Municipal Lodging Taxes
Canadian STR hosts face up to four layers of consumption tax depending on their province and city. Rates below are indicative examples for common jurisdictions.
The federal GST (5%) applies nationwide on stays under 30 consecutive days. Provinces with HST replace GST with a blended rate. Several provinces add a tourism levy, and many municipalities add a Municipal Accommodation Tax (MAT). Total lodging tax burden varies significantly by location.
Total lodging tax burden: ~9%–21% depending on province and municipality
Airbnb Canada tax collection page (airbnb.com/help/article/2283); CRA Sharing Economy page (canada.ca); Vezpa Canada Lodging Tax Guide 2026
| Booking type | Who collects & remits | What it means for your books |
|---|---|---|
| GST/HST — unregistered host | Airbnb or Vrbo collects and remits on your behalf under the digital economy rules | You do not charge GST/HST separately; the platform handles it. You still must monitor the $30,000 threshold. |
| GST/HST — registered host | You collect, report, and remit directly to CRA via your GST/HST return | Provide your GST/HST number to the platform so it does not double-collect. You can claim Input Tax Credits (ITCs) on eligible expenses. |
| Provincial tourism levy / MAT | Airbnb auto-collects in many provinces and cities; Vrbo coverage varies by municipality | Verify your specific municipality. If the platform does not collect, you must collect and remit directly to the provincial or municipal authority. |
A stay of 30 consecutive days or more under a single booking is generally exempt from GST/HST. Quebec residents may also have QST obligations and may need a CITQ classification number. Always verify current rates with your provincial and municipal authority.
Platforms
How Airbnb, Vrbo & Other Platforms Report Your Income
Canadian platforms are required to report host earnings to the CRA under the OECD Model Reporting Rules for Digital Platforms (effective January 1, 2024 for Canadian operators). The CRA receives your income data — report everything.
| Platform | Reports your income | Collects the local lodging tax | Annual earnings summary |
|---|---|---|---|
| Airbnb | Yes — reports to CRA under digital platform reporting rules | Yes — GST/HST for unregistered hosts; MAT in many municipalities | Annual earnings summary available in your host dashboard; no standardized Canadian tax slip issued to hosts |
| Vrbo | Yes — reports to CRA under digital platform reporting rules | Partial — GST/HST in some provinces; MAT coverage varies by municipality | Annual earnings summary available in owner account; verify which taxes are collected for your location |
| Direct bookings / other platforms | Platform-dependent; host is responsible for full compliance | No — host must collect and remit all applicable GST/HST and lodging taxes | No automated summary; maintain your own records of all bookings and payments received |
Hosting on Multiple Platforms
If you list on Airbnb, Vrbo, and direct channels simultaneously, you must aggregate revenue from all sources to monitor the $30,000 GST/HST registration threshold. Each platform may handle tax collection differently — gaps in collection become your personal remittance obligation. Keep separate booking logs for each channel.
Canada's Digital Platform Reporting Rules (effective 2024)
Canada adopted OECD Model Reporting Rules requiring digital platforms to collect and annually report seller information (including STR host income) to the CRA starting with the 2024 calendar year. The CRA uses this data in compliance activities. This is Canada's equivalent of the EU DAC7 regime.
CRA — Platform Economy compliance page (canada.ca); Airbnb Canada tax collection (airbnb.com/help/article/2283); Vrbo Canada lodging taxes (help.vrbo.com)
Illustrative P&L: Rental Income Route
Example for a host earning $25,000 gross STR revenue in Ontario (marginal rate ~43.41%). Numbers are illustrative only.
Record-Keeping
Stay Audit-Ready: What to Keep and for How Long
The CRA can reassess returns up to three years after the original assessment for most taxpayers, and up to six years in cases of misrepresentation. Keep records for at least six years from the end of the tax year they relate to.
| Keep | How long | Why |
|---|---|---|
| Booking records (platform statements, reservation confirmations, payout reports) | 6 years | Proves gross rental income reported; CRA cross-references platform data |
| All expense receipts (repairs, cleaning, utilities, insurance, mortgage interest statements) | 6 years | Substantiates deductions claimed on T776 or T2125; required if audited |
| Proof of STR compliance (municipal licence, provincial registration, permit numbers) | 6 years (or longer if property still operating) | Post-2023 rules deny all deductions for non-compliant periods; compliance proof is essential |
| GST/HST returns, ITCs, and remittance records | 6 years | CRA can audit GST/HST accounts; Input Tax Credit claims must be supported by valid tax invoices |
| Property purchase documents, CCA schedules, and disposition records | 6 years after the year of sale | Required to calculate adjusted cost base, recaptured CCA, and capital gains on eventual sale |
Digital copies are acceptable to the CRA provided they are complete, legible, and accessible. Back up all records in a second location. If you claim a home-office or shared-space deduction, keep floor-plan measurements and usage logs to support the rental-use percentage.
Estimator
Short-Term Rental Tax Estimator
Plug in your bookings and costs to see your likely taxable position.
Your Numbers
Total short-term-rental income, before costs.
Allowable running costs, mortgage interest, depreciation and platform fees.
Your top income-tax band, as a percentage.
Estimated tax owed
Income tax on your net rental profit at your marginal rate.
Illustrative estimate. A simplified model to orient you — it is not tax advice. Confirm your situation with a qualified local professional.
Sources & notes
This page is for general educational purposes only and does not constitute tax, legal, or financial advice. Tax rules change frequently — always verify current rates and rules with the Canada Revenue Agency or a qualified Canadian tax professional before filing.
- Canada Revenue Agency — Changes to STR deduction rules (January 2025) — https://www.canada.ca/en/revenue-agency/news/newsroom/tax-tips/tax-tips-2025/changes-rules-eligible-deductions-short-term-rental-income.html
- Canada Revenue Agency — Rental expenses you can deduct (T776 guide) — https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/rental-income/completing-form-t776-statement-real-estate-rentals/rental-expenses-you-deduct.html
- Canada Revenue Agency — Sharing economy / platform economy — https://www.canada.ca/en/revenue-agency/programs/about-canada-revenue-agency-cra/compliance/platform-economy/sharing-economy.html
- Airbnb — Tax collection and remittance in Canada — https://www.airbnb.com/help/article/2283
- Vrbo — Canada lodging taxes help article — https://help.vrbo.com/articles/vrbo-stay-taxes-lodging-taxes-canada
- BDO Canada — Short-term rental tax changes (updated April 2026) — https://www.bdo.ca/insights/short-term-rental-tax-changes
- Bennett Jones — Comply or Lose Your Tax Deductions (January 2026) — https://www.bennettjones.com/Insights/Blogs/Comply-or-Lose-Your-Tax-Deductions
- Vezpa — Provincial Tourism Levy & Lodging Tax Guide for Canadian Hosts 2026 — https://vezpa.it/ca/blog/tourism-levy-lodging-tax-canada/
- Nurture Stays — Airbnb Taxes Canada 2026: GTA Host Tax Guide — https://www.nurturestays.ca/blog/airbnb-taxes-canada-gta-guide-2026
- Lodgify — The Host's Guide to Airbnb Taxes in Canada (August 2025) — https://www.lodgify.com/blog/airbnb-taxes-canada/
Questions
Frequently Asked Questions from Canadian STR Hosts
Mr Props Team
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