Educational information only, not tax advice. Rules and figures change — confirm your situation with a qualified Canada tax professional before filing.
Toronto, Canada · Short-term rental taxes
Short-Term Rental Taxes in Toronto
STR income in Toronto is taxed as rental (or business) income on your federal T1 return, plus Ontario's 13% HST once you cross the $30,000 threshold, and a 6% Municipal Accommodation Tax remitted quarterly to the City of Toronto.
The 30-Second Answer
- Rental income from your Toronto STR is reported on Form T776 (Statement of Real Estate Rentals) and taxed at your marginal federal + Ontario rate — deductions are denied entirely if your listing is non-compliant with City registration rules (post-2023).
- Once your gross STR revenue exceeds $30,000 in four consecutive calendar quarters, you must register for HST (13% in Ontario), charge it to guests, and remit it to the CRA.
- As a registered Toronto STR operator you must collect and remit a 6% Municipal Accommodation Tax (MAT) to the City of Toronto on every stay — filed quarterly within 30 days of each quarter-end.
- Platforms like Airbnb collect HST and the MAT on behalf of unregistered hosts under voluntary collection agreements, but you must still file a MAT report each quarter and report all income to the CRA.
Deductions
What Toronto STR Hosts Can Deduct
Reasonable expenses incurred to earn rental income are deductible on Form T776 — but only if your listing is compliant with Toronto's STR registration rules.
If your Toronto STR is non-compliant for any portion of the year (e.g., not registered with the City), the CRA will deny a pro-rated share of all deductions for those non-compliant days. Only expenses proportional to the rental portion of a mixed-use property are deductible.
Filing Calendar
Key Dates & Filing Calendar
Toronto STR hosts face federal income tax, HST, and quarterly MAT deadlines throughout the year.
New hosts: register your STR with the City of Toronto before listing. Non-compliant listings lose all federal tax deductions from 2024 onward.
City of Toronto MAT schedule: toronto.ca/community-people/housing-shelter/rental-housing-rights-information/short-term-rentals/short-term-rental-operators-hosts/short-term-rental-municipal-accommodation-tax/
Income Tax Treatment
Rental Income vs. Business Income: Which Applies to You?
Canada does not have a flat-rate micro-regime. Instead, the CRA classifies your STR income as either rental income or business income based on the services you provide — each has different reporting rules.
Rental Income
Standard treatment for most Toronto hosts
- Report gross income and deductible expenses on Form T776 (Statement of Real Estate Rentals)
- Net rental income is added to your other income and taxed at your marginal federal + Ontario rate
- Capital Cost Allowance (CCA/depreciation) is optional but cannot create or increase a rental loss
- Losses can generally offset other income, subject to CRA at-risk and reasonable expectation of profit rules
No ceiling — applies regardless of revenue
Business Income
Applies when you provide significant services to guests
- Report on the T2125 (Statement of Business or Professional Activities) schedule of your T1 return
- Broader expense deductions may be available; CCA can create a business loss
- HST registration threshold ($30,000) applies the same way
- Consult a tax professional — misclassification can trigger CRA reassessment
No ceiling — determined by level of services, not revenue
Depreciation
Capital Cost Allowance (CCA) for Toronto STR Hosts
Canada uses Capital Cost Allowance (CCA) rather than straight-line depreciation. Assets are grouped into CRA classes and written off at prescribed declining-balance rates.
| Asset | Typical write-off period | Notes |
|---|---|---|
| Residential rental building (brick/concrete) | Class 1 — 4% declining balance per year | Most Toronto condos and houses fall here; CCA cannot create or increase a rental loss |
| Furniture & appliances | Class 8 — 20% declining balance per year | Sofas, beds, refrigerators, washers — common STR furnishings |
| Computer / tablet / smart-home devices | Class 10 or 50 — 30–55% declining balance | Devices used to manage your STR; must be proportional to rental use |
| Leasehold improvements | Class 13 — straight-line over lease term | Renovations to a rented unit used as an STR |
The half-year rule (Accelerated Investment Incentive adjustments may apply) limits CCA to 50% of the normal rate in the year of acquisition for most assets. CCA on rental property cannot create or increase a net rental loss.
When you sell the property, any CCA previously claimed may be 'recaptured' and included in your income in the year of sale. A capital gain on the property is also reportable (50% inclusion rate for gains before June 25 2024; 2/3 inclusion rate for gains realized on or after June 25 2024 above $250,000 for individuals).
Municipal Accommodation Tax (MAT)
Toronto's 6% Municipal Accommodation Tax
Every registered Toronto STR operator must collect and remit the MAT on all short-term stays, regardless of whether a platform collects it on your behalf.
The City of Toronto levies a Municipal Accommodation Tax (MAT) on transient accommodation. For STRs, the rate is 6% of the accommodation charge (excluding cleaning fees and other add-ons). Operators must file a MAT report quarterly even if no tax was collected or if a platform remitted on their behalf.
Up to 19% combined on a typical Toronto STR booking
City of Toronto MAT page: toronto.ca — Short-Term Rental Municipal Accommodation Tax (updated 2026)
| Booking type | Who collects & remits | What it means for your books |
|---|---|---|
| Airbnb booking (host not HST-registered) | Airbnb collects & remits both HST and MAT under voluntary agreements with CRA and City of Toronto | You still must file a quarterly MAT report with the City; income is still reportable to CRA on T776 |
| VRBO / direct booking | Host collects MAT from guest and remits to City; host collects & remits HST to CRA if registered | Track MAT collected separately; remit quarterly; issue HST receipts if registered |
| Any booking — host HST-registered | Host self-collects and remits HST directly to CRA; provide HST number to platform to avoid double-collection | Provide your HST registration number to Airbnb/VRBO so they do not collect HST on top of your price |
The MAT rate returned to 6% on August 1, 2026, after a temporary increase to 8.5%. Always verify the current rate with the City of Toronto before filing.
Platforms
How Airbnb & Other Platforms Handle Toronto STR Taxes
Platforms may collect taxes on your behalf, but the filing obligation and income-reporting responsibility remain yours.
| Platform | Reports your income | Collects the local lodging tax | Annual earnings summary |
|---|---|---|---|
| Airbnb | CRA receives data; Airbnb issues annual earnings summary | Yes — collects & remits HST (for unregistered hosts) and MAT under voluntary agreements | Available in host dashboard; download for your T776 filing |
| VRBO / Vrbo | Income reportable by host; no automatic CRA remittance confirmed | Partial — check platform settings; host may need to collect MAT manually | Annual earnings statement available in host account |
| Direct bookings | Host responsible for all reporting | Host must collect MAT and HST (if registered) directly from guests | Maintain your own records; no platform summary provided |
Hosting on Multiple Platforms?
Aggregate all platform earnings to determine your total gross revenue for HST registration purposes ($30,000 threshold applies across all platforms combined). Keep separate income records per platform for your T776 and MAT filings.
CRA Reporting by Digital Platforms
Canada has implemented platform reporting rules (similar to the OECD DAC7 framework) requiring digital platforms to report seller income to the CRA. Airbnb Canada (BN: 72368 9006 RT9999) already remits taxes and shares data with the CRA. Assume the CRA has visibility into your platform earnings — report all income accurately.
Airbnb Canada tax collection: airbnb.ca/help/article/2283; CRA digital economy rules: canada.ca/en/revenue-agency/services/tax/businesses/topics/gst-hst-businesses/digital-economy.html
Illustrative P&L: Rental Income Method
Example Toronto STR earning $40,000/year gross. Numbers are illustrative only — not tax advice.
Record-Keeping
Stay Audit-Ready: What to Keep and How Long
The CRA can reassess returns up to three years after the original assessment (longer if fraud or misrepresentation is alleged). Keep thorough records from day one.
| Keep | How long | Why |
|---|---|---|
| Platform earnings statements (Airbnb, VRBO, etc.) | Minimum 6 years | CRA standard retention period; needed to reconcile T776 income figures |
| All expense receipts (cleaning, repairs, utilities, insurance, mortgage interest statements) | Minimum 6 years | Required to substantiate deductions on Form T776 in the event of a CRA audit |
| City of Toronto STR registration certificate and renewal documents | Duration of operation + 6 years | Proves compliance — without it, all deductions from 2024 onward can be denied by CRA |
| Quarterly MAT reports and payment confirmations | Minimum 6 years | City of Toronto can audit MAT compliance; MAT paid is also a deductible expense on T776 |
| HST returns and remittance receipts | Minimum 6 years | CRA can audit HST accounts; needed to reconcile input tax credits claimed |
From 2024, a non-compliant Toronto STR (not registered with the City or operating in a prohibited location) loses ALL federal income tax deductions for non-compliant days. Your City registration is now a tax document — keep it safe.
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 educational purposes only and does not constitute tax, legal or financial advice. Tax rules change frequently — always verify current rates and rules with the CRA and City of Toronto, and consult a qualified Canadian tax professional for your specific situation.
- Canada Revenue Agency — Changes to STR deduction rules (Jan 2025) — canada.ca/en/revenue-agency/news/newsroom/tax-tips/tax-tips-2025/changes-rules-eligible-deductions-short-term-rental-income.html
- City of Toronto — Short-Term Rental Municipal Accommodation Tax — toronto.ca/community-people/housing-shelter/rental-housing-rights-information/short-term-rentals/short-term-rental-operators-hosts/short-term-rental-municipal-accommodation-tax/
- CRA — Rental expenses you can deduct (Form T776 guide) — canada.ca/en/revenue-agency/services/tax/businesses/topics/rental-income/completing-form-t776-statement-real-estate-rentals/rental-expenses-you-deduct.html
- Airbnb — Tax collection and remittance in Canada — airbnb.ca/help/article/2283
- Bennett Jones LLP — Comply or Lose Your Tax Deductions (Jan 2026) — bennettjones.com/Insights/Blogs/Comply-or-Lose-Your-Tax-Deductions
- Nurture Stays — Airbnb Taxes Canada: What GTA Hosts Owe in 2026 — nurturestays.ca/blog/airbnb-taxes-canada-gta-guide-2026
- TaxPage.ca — Disallowed Tax Deduction Changes for Short-term Rental Income — taxpage.com/articles-and-tips/income-tax-deductions-from-short-term-rental-income-disallowed-tax-deduction-changes/
Questions
Frequently Asked Questions — Toronto STR Taxes
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