Airbnb Tax Advice For Home OwnersBrian Jang ON July 24, 2017
What You Need to Know About Renting Out Your Home
Like countless other Canadians, you might be thinking about renting out a room—or your entire home—to travelers. Airbnb is an increasingly popular venture among homeowners (55,000 and climbing) that can earn you some extra cash. If you’re opting to share your home through Airbnb, here are five things to keep in mind when it comes time to filing your taxes.
List your Airbnb
The Canadian Revenue Agency is not going to come after you for listing your home as an Airbnb rental—as long as you pay your taxes, of course. In the government’s eyes, there is no real difference between long or short-term rental earnings. As long as the CRA gets their slice of the pie, it is perfectly legal to rent out your home.
Report your Airbnb Earnings
There’s no getting around this one. Any income you earn is taxable. According to the CRA, people making money from Airbnb must report it on a Form T776 (Statement of Real Estate Rentals). Failure to do so will result in interest owing on the outstanding taxes, financial penalties, and in some cases, even prosecution. To avoid other costly tax consequences when renting out your home, remember to put aside some money for taxes.
Register for a GST Number
Did you make more than $30,000 through home-sharing? If you did, you’ll have to add GST to your guests’ invoices and submit it the CRA. In order to do that, Airbnb hosts will have to register for a GST number.
Claiming Your Expenses
Like running any business, you’ll obviously want to do everything you can to reduce the amount of tax you pay. So, it is important to keep meticulous records of all your home-sharing related expenses. Airbnb hosts can claim a wide variety of costs, including maintenance, utilities, internet connection, advertising, insurance, investment property tax, and more.
Work with a Chartered Professional Accountant
When it comes to running an Airbnb, preparing for tax season can get confusing. To make things more manageable, you’ll want to contact a chartered professional accountant.
Here are some of the important questions to consider when working with an accountant:
- How do you declare rental income?
- What is the tax rate for rental property income?
- How can I make the most of Airbnb tax deductions?
If you need help with your Airbnb tax preparation, contact us today.