Airbnb Host Tax Guide Canada: How Short-Term Rental Income Is Taxed

The CRA treats income from renting out a room, a suite or a whole home through Airbnb as taxable, and the main question for a host is what kind of income it is. This guide covers how the income is classified, what Airbnb’s platform reports, which expenses you can deduct, the principal residence question, and when the GST/HST applies. It is part of the self-employed taxes hub; for running a listing (pricing, city licensing, insurance), see how to make money with Airbnb and Airbnb rules by city.

Rental income or business income

The CRA’s accommodation-sharing guidance names Airbnb among the platforms it covers and says all income from accommodation sharing is subject to income tax. How you report it depends on the services you provide:

The difference matters beyond the form. Business income is self-employment income, so it also brings CPP contributions: the CRA says self-employed people are responsible for both the employer and employee parts, worked out on Schedule 8. The Canada Pension Plan Act, section 14, leaves out of self-employed earnings the income of “a business more than fifty per cent of the gross revenue of which consisted of rent from land or buildings”, so for a hosting business, CPP can also depend on how much of its gross revenue counts as rent. The self-employed tax calculator shows how that works and how much of it is deductible.

What Airbnb reports, and what it keeps

Under the Reporting Rules for Digital Platform Operators in Part XX of the Income Tax Act, platforms that let sellers sell goods or provide services such as rentals, rideshare and delivery report each reportable seller's identity and earnings to the CRA every year, starting with the 2024 calendar year, and give the seller a copy by January 31 of the following year. A seller with fewer than 30 sales of goods totalling $2,800 or less in the year isn't reported. Being reported, or not, doesn't change the seller's own tax obligations. Rentals of residential and commercial property are among the activities the CRA lists as covered (reporting rules for digital platforms). For a host, the report includes:

• For each reportable seller, the platform reports the total paid or credited to you and any fees, commissions or taxes the platform withheld or charged, broken down by calendar quarter.
• It also reports identifying information such as your name, primary address, tax identification number and date of birth.
• For rentals of real or immovable property, it also reports the address of each property listing.
• The CRA may charge a $500 penalty for each failure to give a platform your tax identification number.

In Canada, a tax identification number includes a social insurance number or a business number. These rules are an information return, not a tax.

The host service fee. Airbnb’s help centre says most hosts on the split-fee structure pay a 3% service fee, and under the single-fee structure, where the whole fee comes out of the host’s payout, most hosts pay 15.5%. The fee is a percentage of the nightly price and any fees charged by the host. It is a fee, not a sales tax. Your gross rents are what guests paid for the stays; the fee Airbnb keeps is a cost of earning that rent, and the CRA says you can generally deduct reasonable expenses you incur to earn rental income from a compliant rental.

Deductible expenses

If you rent part of the home you live in, most costs are split between the rented space and your own use:

For short-term stays, the CRA’s accommodation-sharing guidance adds a second step: after taking the rented share of the home’s area, multiply by the share of days in the year the space was rented. A room you list for part of the year carries only that part of the year’s costs.

Costs that relate only to the rented space, such as cleaning between guests, supplies left for guests and repairs to the rented room, are not split. The CRA’s rental income guide (T4036) lists the expense lines on Form T776, and rental property expenses you can deduct goes through them.

Rentals that break local rules. For a short-term rental (rented or offered for rent for less than 90 consecutive days), expenses and capital cost allowance for the days it doesn't comply with provincial or municipal rules (it isn't permitted at that location, or it lacks a required registration, licence or permit) can't be deducted. Airbnb rules by city covers the licensing rules in the main markets.

Furniture and appliances (capital cost allowance). Items that last, such as beds, furniture and appliances bought for the rental, are not deducted all at once. Most rental buildings bought after 1987 are Class 1, depreciated at 4% a year on a declining balance, and furniture and appliances are Class 8 at 20%; land isn't depreciable. In the year you buy, the half-year rule generally limits the claim to half of your net additions to a class, but it doesn't apply to property that qualifies for the accelerated investment incentive (acquired after November 20, 2018 and before 2025) or the reaccelerated incentive (acquired after 2024), as a rental building bought from a seller you deal with at arm's length usually does. The half-year rule doesn’t apply to accelerated investment incentive property (acquired after November 20, 2018 and before 2025, available for use before 2028) or reaccelerated investment incentive property (acquired after 2024, available for use before 2034); small business tax deductions explains these first-year rules. Capital cost allowance (CCA) is optional and is worked out after combining the net income or loss of all your rental properties: it can bring that net rental income down to zero, but it can't create or increase a rental loss. Claiming capital cost allowance on part of your home also affects the principal residence question below.

Losses. A rental loss can be deducted from your other income only if you incurred the expenses to earn income: you can't claim one when you rent to someone you know for less than you'd charge a stranger, when a family member or housemate only shares costs, or when renting part of your home has no reasonable expectation of profit.

Your home and the principal residence exemption

Renting part of the home you live in can change how much of the gain is tax-free when you sell:

Renting out the whole home while you live elsewhere is a change in use; the principal residence exemption guide and principal residence exemption when you partly rented your home cover how the exempt share is worked out.

GST/HST for Airbnb hosts

Short-term stays are not exempt from the GST/HST the way long-term residential rentals are:

Whether you have to register yourself follows the general small-supplier rule:

The CRA notes that a host who registers voluntarily can claim input tax credits for the GST/HST paid on expenses, prorated the same way as the income tax deductions. The GST/HST guide for the self-employed covers registering, filing and input tax credits.

Quebec. Revenu Québec administers the GST and the Quebec sales tax (QST) in Quebec, and the CRA notes that a host whose establishment is in Quebec may also have to register for Quebec’s tax on lodging.

Reporting and records

• Rental income: fill in Form T776 and report the gross and net amounts on lines 12599 and 12600 of your return.
• Business income: fill in Form T2125 and report on lines 13499 and 13500. If you end up owing tax at filing time, the CRA can ask you to pay by instalments in later years; first-time self-employed taxes explains when.
• Records: The CRA says to keep your records for six years from the end of the last tax year they relate to (unless it lets you destroy them earlier), at your Canadian residence or place of business unless it allows another place; you are responsible for them even when a bookkeeper or accountant keeps them, and you must make them available to the CRA on request. For a host, that means each booking’s dates and amount, the payout statements, receipts for every expense, and the floor areas and days you used to split shared costs.

Short-term rental tax rules

All income from short-term rentals booked through Airbnb, VRBO or directly is taxable, and how you report it depends on the services you provide. This page covers the federal tax side for hosts: rental income versus business income, GST/HST, the rule that denies deductions for rentals that break provincial or municipal rules, expenses, capital cost allowance (CCA), the principal residence exemption and platform reporting. It is part of WealthNorth’s real estate tax hub. City licensing rules and local accommodation taxes are on Airbnb rules by city.

Is short-term rental income taxable?

Yes. The CRA’s page on accommodation sharing says: “All income you receive from an accommodation sharing arrangement is subject to income tax.” The question is which kind of income it is.

Rental income or business income

The CRA’s own examples: a host whose price includes meals, cleaning and tour reservations reports business income on Form T2125; a host whose price covers only the accommodation with heat, hydro and parking reports rental income on Form T776 (CRA, accommodation sharing). A corporation reports on its T2 return with Schedule 125 instead; incorporating your rental properties covers how a corporation is taxed on rent.

CPP on business income. For a self-employed person, Service Canada says CPP contributions “are based on your net business income (after expenses). You do not contribute on any other type of income, such as investment earnings.” You contribute to the CPP if you are over 18, work in Canada outside Quebec and earn more than $3,500 a year; contributions stop when you turn 70, and from 65 someone already receiving a CPP or QPP retirement pension can choose to stop. The self-employed rate for 2026 is 11.90%, up to a maximum of $8,460.90; CPP contribution rates has the full table. A host whose rental is a business also follows the self-employed rules; see the Airbnb host tax guide.

Two different “short-term” tests

The income tax rule and the GST/HST rules each define a short-term rental, and the periods differ:

Rentals that break local rules lose their deductions

For outlays made and expenses incurred after 2023, the Income Tax Act limits the deductions of short-term rentals that break provincial or municipal rules (S.C. 2024, c. 17, s. 16). The full rule, from section 67.7:

• A short-term rental is a residential property rented or offered for rent for less than 90 consecutive days.
• It is non-compliant on any day the province or municipality doesn't permit a short-term rental at that location.
• It is also non-compliant on any day the province or municipality requires registration, a licence or a permit and the rental doesn't meet all of those requirements.
• The amount you can't deduct is the year's short-term rental expenses multiplied by the non-compliant days and divided by the days it was a short-term rental.
• Capital cost allowance for those days is denied the same way as other expenses.
• For 2024, a rental that met all its registration, licence and permit requirements by December 31, 2024 is treated as compliant for the whole year.

On Form T776, the expenses denied go on line 9366 and the CCA denied on line 9367 (CRA Guide T4036). Whether a city requires a licence or limits short-term rentals to a principal residence is set locally: Airbnb rules by city covers the major cities.

GST/HST on short-term rentals

Stays of less than one month that cost more than $20 a night are taxable for the GST/HST (long-term residential rentals are exempt): a host registered for the GST/HST charges it on their own stays, and for hosts who aren't registered, a platform such as Airbnb charges and collects it on the stays it books. Platforms have collected it for hosts who aren’t registered since July 1, 2021.

When a host has to register: You have to register for the GST/HST once you make taxable sales in Canada and are no longer a small supplier: that happens when your taxable sales go over $30,000 in a single calendar quarter (register from that sale) or over the last 4 consecutive calendar quarters (by the end of the month after that quarter); below that you can register voluntarily. The threshold counts more than the rental: a sole proprietor includes revenue from taxable supplies “from all your businesses and those of your associates” (CRA, when to register). The CRA notes, for example, that “If you have taxable sales from both accommodation and commercial ridesharing services, and the total is less than $30,000, you have to collect and remit GST/HST only on the commercial ridesharing services” (CRA, accommodation sharing); ridesharing has its own rule: A self-employed driver who provides commercial ride-sharing is treated as a taxi business for GST/HST: they must register and charge GST/HST on fares from their first ride, even below the $30,000 small-supplier threshold. Delivering food or groceries is not ride-sharing, so the usual small-supplier rule applies to it.

A host who registers can claim input tax credits for the GST/HST paid on rental expenses; the CRA says these credits are “prorated in the same way as expenses that are deducted for income tax”. In Quebec, “Revenu Québec administers the GST and Quebec sales tax (QST) in the province of Quebec”, and “If your establishment is in Quebec, you may also have to register for the tax on lodging” (same CRA page). Provincial sales taxes on accommodation and municipal accommodation taxes are separate from the GST/HST; Airbnb rules by city lists them by province and city, and the sales tax hub covers registering and filing.

Changing how the property is used. The GST/HST has its own change-of-use rules for residential property. The rule for a rental that becomes personal use, from the CRA’s GST/HST Memorandum 19.2.3:

• The property was being used in commercial activities, such as a registrant's short-term rentals.
• The change makes it used primarily (more than 50%) for other purposes or personal use, for example when the owner stops renting it and moves in.
• There is a deemed sale of the property, and unless that sale is an exempt supply, the owner is deemed to have paid and collected GST/HST on it.
• The tax is the property's basic tax content minus any tax the owner is already deemed to have collected under section 190.

The memorandum covers the other changes of use.

Expenses you can deduct

The CRA says that for a compliant short-term rental “you can generally deduct any reasonable expenses you incur to earn rental income for the period during which the short-term rental was compliant” (CRA, accommodation sharing). Rental property expenses you can deduct goes through them line by line. Two rules decide how much of an expense you can claim:

• Current or capital. A rental expense that only restores the property to its original condition is usually a current expense, deducted in the year you pay it; one that improves the property beyond its original condition, extends its life, gives a lasting benefit or replaces a separate asset is usually a capital expense, added to a CCA class instead.
• Renting part of your home. When you rent out part of the home you live in, you deduct the expenses that relate only to the rented area in full and a share of the expenses for the whole property, split by square metres or by the number of rooms you rent. For a room rented through a platform, the CRA’s accommodation-sharing page also prorates the expense by the percentage of days in a year that the space was rented.

A rental loss can reduce your other income only in some cases: A rental loss can be deducted from your other income only if you incurred the expenses to earn income: you can't claim one when you rent to someone you know for less than you'd charge a stranger, when a family member or housemate only shares costs, or when renting part of your home has no reasonable expectation of profit.

Capital cost allowance

Furniture, appliances and the building itself are capital property, deducted over time through CCA rather than in the year you buy them. Most rental buildings bought after 1987 are Class 1, depreciated at 4% a year on a declining balance, and furniture and appliances are Class 8 at 20%; land isn't depreciable. In the year you buy, the half-year rule generally limits the claim to half of your net additions to a class, but it doesn't apply to property that qualifies for the accelerated investment incentive (acquired after November 20, 2018 and before 2025) or the reaccelerated incentive (acquired after 2024), as a rental building bought from a seller you deal with at arm's length usually does. Capital cost allowance (CCA) is optional and is worked out after combining the net income or loss of all your rental properties: it can bring that net rental income down to zero, but it can't create or increase a rental loss.

CCA claimed on a building can come back into income when you sell: When you sell a rental building for more than its undepreciated capital cost (UCC), the difference, counting the sale price only up to the building's original cost, is recaptured CCA and added to your income in full; a sale above the original cost is also a capital gain, and if no property is left in the class and some UCC remains, that remainder is a terminal loss you deduct. CCA on rental property covers the classes and the calculation.

Claiming CCA on a home you live in also affects the principal residence exemption (next section).

The principal residence exemption

Hosting in your own home can change how much of the gain is tax-free when you sell. The gain on a home is tax-free for each year you designate it as your principal residence: you or your family must have ordinarily lived in it that year, a family can designate only one home a year, and you report the sale on Schedule 3 and Form T2091; the exempt share is the years designated (while resident in Canada), plus one if you were resident in the year you bought it, divided by the years owned.

• Renting out part of your home: Renting out part of your home keeps the whole home a principal residence only if the rental is ancillary to your use of it as a home, you make no structural change to it, and you claim no capital cost allowance on it; otherwise the rented part is treated as changed to a rental, and only the home part of the gain is exempt when you sell.
• Turning the whole home into a short-term rental: Turning your home into a rental is a deemed sale at fair market value, but you can elect under subsection 45(2) of the Income Tax Act not to be treated as having changed its use: you then can't claim capital cost allowance on it, you still report the net rental income, and you can keep designating it as your principal residence for up to four years (longer for some work relocations) as long as you designate no other home and stay resident in Canada.

Principal residence exemption with partial rental and converting a home to a rental work through both cases.

What platforms report to the CRA

Under the Reporting Rules for Digital Platform Operators (Part XX of the Income Tax Act), in force since January 1, 2024, platforms collect information about hosts and report it to the CRA. The first reportable period was the calendar year 2024, with returns due January 31, 2025 (CRA guidance). The report includes, from the CRA’s list of reportable elements:

• your name, primary address and tax identification number (in Canada, a social insurance number or business number);
• the total paid or credited to you, by calendar quarter, and the fees, commissions or taxes the platform withheld or charged;
• for property rentals: the address of each property listing; if available, the land registration number; and where available, the number of days each property listing was rented during the reporting period and the type of each property listing.

The platform gives you a copy of what it reported by January 31 of each year, which you can compare with the income on your return.

Records

The CRA says to keep your records for six years from the end of the last tax year they relate to (unless it lets you destroy them earlier), at your Canadian residence or place of business unless it allows another place; you are responsible for them even when a bookkeeper or accountant keeps them, and you must make them available to the CRA on request. For a short-term rental that means each booking and payout, receipts for expenses, and a calendar of the days the property was rented, used personally and (for the rule above) compliant. If you have more than one rental: With more than one rental property, you combine the net income or loss from all of them before you claim CCA.

Related guides

• Self-employed taxes hub
• Self-employed tax deductions in Canada
• GST/HST on freelance and self-employed income
• Side hustle taxes in Canada
• How rental income is taxed in Canada
• How to report rental income (Form T776)
• Principal residence exemption guide