GST/HST on Short-Term Rentals

As the popularity of short-term rentals such as Airbnb increases, it is important to consider the potential GST/HST implications on such rentals.

Generally, the rental of residential real estate is exempt from GST/HST. However, an exception to this rule is short-term rentals. A rental is considered to be short-term when the occupancy period is less than one month, and the daily rental rate is in excess of $20.

If your worldwide taxable sales (including sales of all associated persons) are equal to or less than $30,000 over the last four calendar quarters, you are considered a small supplier and are not required to register for nor charge GST/HST. However, if you exceed this sales threshold, you must register for and charge GST/HST. A common oversight is not considering associated persons and/or businesses when considering the small supplier threshold. Overlooking this area can result in costly assessments. Analyzing the association rules can be a complicated area that we would be happy to advise on separately.

In situations where you are not required to register for and charge GST/HST, you may want to consider voluntarily registering. Doing so would allow you to claim input tax credits on GST/HST paid on expenses related to the short-term rental. However, you would also be required to charge GST/HST on the rental and file a GST/HST return. The benefits of claiming the input tax credits need to be weighed against the administrative costs of compliance.

If you are considering entering or are already in this market, please set up an appointment with us to ensure the GST/HST is being handled correctly as well as some other non-GST/HST factors that may need to be considered.