Airbnb Taxes in Canada: What Hosts Need to Know About HST, Income Tax & Property Sales
With the continued growth of short-term rentals in Canada, many Airbnb hosts are unaware of their tax obligations. Whether you're renting a single room or managing multiple properties, understanding Airbnb taxes in Canada is crucial to staying compliant with the Canada Revenue Agency (CRA) and avoiding unexpected penalties.
This guide covers how HST applies to Airbnb rentals, whether your income is considered business or rental income, and what happens when you sell a short-term rental property.
Do Airbnb Hosts in Canada Have to Charge HST?
Yes, Airbnb hosts in Canada must charge Harmonized Sales Tax (HST) or Goods and Services Tax (GST) on short-term rentals of 30 days or less. The applicable rate ranges from 5% to 15%, depending on your province.
If your Airbnb income exceeds $30,000 in a 12-month period, you're required to register for a GST/HST number with the CRA. If you don’t provide this to Airbnb, the platform will automatically collect and remit HST/GST on your behalf.
Is Airbnb Income Taxable in Canada? Business vs. Rental Income
The CRA classifies Airbnb income as either rental income or business income, depending on the services you provide.
- If you only provide the space (e.g., no meals, daily cleaning, concierge services), your earnings are considered rental income.
- If you offer hotel-like services (e.g., breakfast, frequent cleaning, guest services), your earnings may be classified as business income.
Why does this matter?
1. Business income requires you to remit Canada Pension Plan (CPP) contributions.
2. Expenses claimed for tax deductions may differ between rental vs. business income.
3. Short-term rental businesses may be subject to additional compliance obligations.
Do You Have to Pay HST When Selling an Airbnb Property in Canada?
If you sell a property that has been primarily used for short-term rentals, it may be subject to HST—similar to a commercial property.
Key factors that determine HST applicability:
- More than 90% of the rentals were short-term stays
- The property was consistently listed for transient rental purposes
- You claimed input tax credits (ITCs) for HST paid on expenses
In contrast, long-term rental properties (leases of 30+ days) and personal-use homes are generally exempt from HST upon sale.
How to Reduce Tax Liability When Selling an Airbnb Property
If you're selling a short-term rental property, consider these strategies to minimize taxes:
- Principal Residence Exemption – If you've lived in the property as your primary home for part of the time, you may reduce or eliminate capital gains tax.
- Incorporation – Running your Airbnb business through a corporation could provide tax deferral advantages.
- Tax Planning with Losses – If you've experienced losses from your Airbnb business, these can be used to offset capital gains tax.
Final Thoughts: Stay Compliant & Maximize Your Airbnb Profits
Understanding your Airbnb tax obligations in Canada is key to avoiding penalties and maximizing your earnings. From HST requirements to rental income tax and capital gains tax on Airbnb property sales, planning ahead will help you stay compliant and keep more of your profits.
Need expert guidance? Book a tax consultation with YBL’s real estate tax specialists to ensure you're optimizing your short-term rental strategy.
Let’s make sure your Airbnb business is tax-efficient and CRA-compliant!