Tax tips for Airbnb hosts in Canada

airbnb tax canada
Did you spend a few days or weeks renting out your home or condo on Airbnb last year? If so, then remember, this year you’ll owe taxes on the income you earned. To make the experience easier, H&R Block Canada has announced a partnership with Airbnb.

“Reporting rental income is a requirement by the CRA,” says Valorie Elgar, senior tax professional in Calgary. “So if you rented out your home, or a room in your home in 2016, you must declare the income.”

In fact, more than 55,000 Canadians are opting to share their homes through Airbnb and with that many people doing it these days, H&R Block wants to make it easier. “We want to let Airbnb hosts tap into the tax expertise at H&R Block to better understand what is taxable and what isn’t in the sharing economy,” says Elgar. As encouragement to come into an H&R Block office to get your taxes done, hosts can download a coupon on the H&R Canada website and it will entitle you to a 15% discount on your tax preparation if you’re a host and file your taxes before May 15, 2017.

To make the process go smoothly, Elgar recommends that Canadian hosts keep proper records of all income and expenses incurred for their Airbnb business. That means keeping invoices or any contracts you may have with a management company. “You should keep a record of all contact with clients including their names, dates they used your services as well as all rent that was paid to your for its use,” says Elgar. “And if you make more than $30,000 with Airbnb you will also have to add GST to your client invoices and remit that.”

Of course, you can also claim some deductions on a pro-rated basis. That includes the number of days your property is rented out annually as well as the square footage of the rental area. So whether it’s only one room—or the whole house—attach records of mortgage interest, property taxes, maintenance, etc., to lower taxes due. Also remember that you will likely owe tax on the rental income you received—tax that you likely haven’t set aside during the 2016 tax year. “To make sure you have enough money on hand to pay those extra taxes at year-end, from now on set aside 30% or so of the Airbnb rental income each and every time you receive it from an Airbnb client to cover the income taxes due, as well as any GST amounts owing.”

Of course, if you haven’t kept records for 2016, try to get any receipts you can now. “But if you don’t have any receipts for maintenance, housecleaning or renos on the property, you won’t be able to get a deduction for it.” And if you haven’t been keeping good Airbnb records? Start doing so now. The sooner you get used to diligently keeping records of all rental transactions, the easier it will be next year at tax time. “Remember, whether it’s just a couple of days a year, or a couple of months or more, the CRA expects every dollar to be claimed,” says Elgar. “So it’s never too early to start tax planning for it.”

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