Accommodation sharing is renting part or all of a property for a short period. It can include your primary residence or your secondary residence. It also includes any rentals facilitated by a third party, a website, or an app.
Income tax implications of accommodation sharing
All money you receive as a result of an accommodation sharing arrangement is taxable for income tax purposes and you should report it as rental income when you file your income tax returns. Individual situations vary and the tax implications could be different depending on the specific facts of the situation.
When you change the use of a property or part of a property (for example, from using it personally to renting it out or vice versa), there could be tax consequences. For more information, go to Changes in use.
How to report rental income on your income tax return
You should report any income you receive from renting property or accommodation sharing on your income tax return and file Form T776, Statement of Real Estate Rentals with the Canada Revenue Agency (CRA). For help on filing a statement of rental income and expenses, go to Completing Form T776, Statement of Real Estate Rentals.
Make sure you keep detailed records of all rental income you earn and any expenses you incur to earn that income in case the CRA asks to see them.
How to deduct rental expenses on your income tax return
Generally, you can deduct any reasonable expenses you incur to earn rental income. However, when you rent only part of a building where you live, such as a room in your house, you can claim only the expenses that relate specifically to the rented part of the building. This means that you have to divide generic expenses for the property on a reasonable basis, such as the percentage of the total living area that is being rented. You also have to divide the expenses in line with the proportion of time the room is rented.
If your annual electricity bill for your entire home is $1,000 and you rent out a room in your home for three months, you cannot deduct the full $1,000 as an expense. If the area being rented makes up 10% of the area of your home and the room was rented for three months, then the allowable expense would be $25 (10% x 3/12 x $1,000 = $25).
For more information, see Expenses you can deduct.
Goods and services tax/harmonized sales tax (GST/HST) implications of accommodation sharing
If you earn more than $30,000 of gross revenue over four consecutive calendar quarters through the supply of taxable goods and services, which includes the provision of short term accommodation, you are required to register and start collecting and remitting the GST/HST. Short term accommodation is defined as rental where the period of continuous occupancy is less than one month. Rentals of residential premises for periods of continuous occupancy of one month or more are exempt from GST/HST.
If you are a small supplier who earns less than $30,000 of gross revenue from accommodation sharing or other goods and services, you may voluntarily register to take advantage of the related input tax credits (prorated in the same manner as the expenses that are deducted for income tax purposes).
If you are already registered for GST/HST, you are required to collect and remit GST/HST on your short term accommodation revenues even if they do not exceed $30,000.
For more information on GST/HST registration, go to Registering for a GST/HST account. For information about your specific GST/HST situation, see the Excise and GST/HST Rulings and Interpretations Service.
Revenu Québec administers the GST/QST in the province of Québec. For more information about GST/QST registration, see Registering for the GST and QST. Note that if your establishment is located in Québec, you may also have to register for the tax on lodging. For more information, go to Registering for the Tax on Lodging.
How to correct your tax affairs if you did not report rental (or other) income in past years
If you do not report your rental income, you may have to pay penalties and interest. By correcting your tax affairs you could eliminate or reduce penalties and interest.
To correct your tax affairs and report income that you did not report in previous years, you have two options:
- You can ask to change previous years’ income tax returns. Details are available at How to change your return. If you live in Quebec, go to Changing an income tax return you have already filed.
- In certain circumstances, you may qualify to use the Voluntary Disclosures Program. Quebec residents may also qualify for Quebec Voluntary Disclosures.
For more information
If you have questions, call 1-800-959-8281.
If you live in Quebec, go to the Revenu Quebec contact page.
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