We’ve all heard stories of someone who has earned a significant amount of money by renting out their house, apartment or cottage on Airbnb. But before you jump to listing your property on Airbnb or another short-term rental platform, you should know what you’re getting into.
Our Richmond Hill real estate lawyers can ensure you understand the most important things to consider when you rent your property on Airbnb in Ontario.
Check your local by-laws
Some municipalities, including Toronto and Ottawa, have by-laws restricting short-term rentals. Municipalities are concerned that if a large number of landlords convert their rental properties to short-term rentals, it will have a detrimental effect on the affordability of the long-term rental market. They are also concerned about the effect that homes without permanent residents are having on neighbourhoods in terms of noise complaints and garbage building up.
In Toronto, for example, you can rent out your principal residence on a short-term basis. A secondary or investment property, however, can only be listed in certain circumstances, such as if you operate a hotel. You can rent out your entire home for up to 180 days per year or up to three rooms in your home for as many days as you like.
In Ottawa, the city recently imposed rules limiting short-term rentals to primary residences and cottages, and the potential landlord must obtain a permit from the city first. Permits will only be given to individuals, not corporations.
Check your strata rules
Some condominiums have rules against short-term rentals or limit the number of rentals that can exist in the building at any given time. Other condos and apartment buildings started banning short-term rentals during the pandemic in an attempt to protect building residents. Make sure you know the rules for your building.
COVID-19 Concerns
In the spring of 2021, the Ontario government effected a temporary ban of short-term rentals like Airbnb except for individuals in need of housing to prevent non-essential travel for the duration of the province’s travel ban. While the temporary ban has since ended, the pandemic has obviously had a negative impact on the travel and hospitality industry in general, so take this into account when considering listing your property.
Tax Concerns
Any income that you earn from short-term rentals is included in your income for income tax purposes. You may be able to use certain expenses as deductions, but what you can deduct and the portion of the expense that can be associated with earning the income will depend on your specific situation. Consult your lawyer or accountant before you file your income taxes.
While long-term rentals are exempt from HST, there is no such exemption for short-term rentals. Therefore, unless you qualify as a small supplier (earning less than $30,000 in four calendar quarters), you must register for an HST account and charge HST to your short-term tenants. You are then responsible for remitting the amount of the HST to the government.
Contact our Richmond Hill Real Estate Lawyers For Legal Help Today
If you intend to purchase a new property for the express purpose of listing it as a short-term rental, you may have additional concerns. Contact our Richmond Hill real estate lawyers today to discuss more things to consider when you rent your property on Airbnb in Ontario.
* Please note that the information in this article is not intended as legal advice, but rather as a general overview on the subject. If you are seeking legal advice, please consult with a lawyer.
