CRA Tax filing tips for Canadian AirBnb Hosts - Canada

Hi all,

I know tax time is upon us in Canada and it seems to me like there are some gray areas for Canadian hosts making a filing to the CRA (the IRS equivalent). I took a few hour to read through all of the tax consequences of filing rental income (whew).

So here is a summary of what I learnt:

  • As a home owner, we can write off expenses that we have incurred. There are two types of expenses, current and CCA (capital cost allowance).

  • Current expenses include Utilites, Insurance, and Property taxes as well as any maintenance of the rental (ie. painting, repairs) as a percentage of your rental.

  • CCA are expenses made to the building to improve the condition or the creation of the rental.

  • The CRA considers you to change your designation from principle property to rental property if you start renting your place out.

  • However, the CRA allows us to mark our property as still be our principle property considering the following are met:

the part you use for rental purposes is small in relation to the whole property; you do not make any structural changes to the property to make it more suitable for rental purposes; and you do not deduct any CCA on the part you are using for rental purposes.

  • As a home owner, I won’t be claiming CCA, because of the fact that if I sell the property we would have to pay capital gains tax on the rental part when we sell our house. This makes sense, since you are claiming a CCA expense and you are not using it as your personal home.

  • To satisfy the first point, if you only rent 2 of 5 rooms then that would be fine. Consequently 2/5 is 40% so l will be claiming 40% of all the current expenses.

  • Therefore, I could still treat my property as my personal property.

  • Interestingly, if you are hosting your second property on Airbnb then you could claim the full cost of the renovations as CCA. So that is a good thing to consider. However you do have to pay capital gains if you do decide to sell it though.

I’m no tax expert so please use this information just as reference.

I do like to point out another thing that I read from their docs. If you are renting your place not for the purposes of income but to split the costs associated with the property, then you would not need to file rental income. The use case here would be something like couchsurfing where you are not paid / paid minimally for the lodging. However that is a gray area when it comes to AirBnb (unless you charge very little or your revenue from Airbnb is less than the cost of running your place (ie. utilities/property taxes/etc).

Where did you read this? Could you please provide the link? Thanks!;jsessionid=-cfemsQ6EY5ZJWaxUSWfVA**.61-caapp1

Look for cost-sharing arrangments:

You may have questions about whether or not you should claim rental income received from relatives or friends that live with you, and whether or not you can also claim rental expenses. This depends on the type of rental agreement you have with the tenant. Think of cost sharing as charging your relative/tenant a small amount per month to help with groceries, utilities, or general household upkeep. The amount charged would be far less than market value for the rental on the open market. In cases like this, you would not report the income from the cost sharing, but you also would not be allowed to claim any rental expenses.

In Cost-Sharing arrangements, the Property owner cannot claim a Rental Loss. If you lose money because you are renting a property to a relative for a lower rate than you would rent it to other tenants, you cannot claim a rental loss.When your rental expenses are consistently more than your rental income, you may not be allowed to claim a rental loss because your rental operation is not considered to be a source of income.
However, you can claim a rental loss if you are renting the property to a relative for the same rate as you would charge other tenants and you reasonably expect to make a profit. In cost-sharing situations like this, the tenant will not be able to claim any tax benefit from Rent paid, or any of the Rental tax breaks provided, such as a portion of the Ontario Trillium Benefit.

If you charge a tenant fair market value for the rental, and expect to make some form of profit, you should report all rental income received, and you claim rental expenses consistent with the nature of the rental arrangement.