Hello I have a question for Airbnb deductions. If the occupancy rate is only 20% (80% of the time it is vacant simply because of no bookings), can I deduct all the property taxes, insurance etc, or only 20%. Thanks

Regulations/Tax Issues
1

Hi all,

I’m a host in Canada. My occupancy rate was really low for 2022, less than 20%. Can I still deduct 100% property tax, insurance etc?

2

If it’s a standalone place and STR is its only use, then yeah you can claim it all, even if it’s running at a loss. But you can only do that for so long before CRA will want to know what’s going on.

If it’s being used for something else when it’s vacant, then you’ll need to adjust.

I think you should have an account help with this.

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3

I agree with mica555. The money paid for an accountant will be well spent keeping you out of hot water. Everyone’s situation tends to be a little different and accountants ask the right questions.

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4

This host doesn’t mention personal use. If the house is vacant 80% if the time do they ever stay there, let the kids or relatives or friends use it? Also if they use it for home exchanges for their own travel? All must be considered….

5

As others have said, ask your accountant.

just thinking aloud here, but I imagine that fees that you pay annually such as property tax, STR insurance, your business license and so on are necessary business expenses regardless of your occupancy.

As a crude example, if a restaurant owner has an empty dining room two nights a week, that owner can’t tell the taxman, the insurance company, the landlord and so on that he/she will only be paying 72% of their dues.

Maybe things are a lot different in Canada?

6

Probably not so different in Canada; it would depend largely on what sort of operation the op has.

We use a part of our home as our STR, so we calculate a percentage (40%) of our home’s insurance, utilities, property tax, etc and deduct it from our income at tax time. If we rented it out only a few nights a year and used the space ourselves the rest of the time, it would be hard to defend as a legitimate business expense.

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7

I suspect the OP doesn’t use any of the home themselves, or they wouldn’t have been able to deduct 100% before.
This is obviously a question for their accountant.

8

We rent our house out when we aren’t using it or at least list it. So if we use it 3 months of the year 25% of all costs are not business related as well as anything we might do strictly for our use. Regardless of the occupancy rate. Or so our accountant advised…