Step 5 – File Your Income Tax Return – Short-Term Accommodations
You are required to report all your income from the rental of an accommodation unit.
To calculate and report your net income, you must deduct the eligible and reasonable expenses you incurred to earn rental income.
You can generally deduct 100% of the expenses (such as advertising fees) that are directly related to the rental of the accommodation unit.
You can deduct a portion of the other expenses. If you rent only part of your residence, you can deduct only the expenses related to the part you rent. In addition, your expenses must relate to the period during which you actually sought to rent the accommodation unit.
Rental income from property or a business
You need to know how to determine whether your rental income is property income or business income since they are not treated the same for tax purposes.
For this reason, you have to take into account the number and type of services you provide to your renters.
If you earn income from renting a space and provide basic services only (i.e. heating, lighting, parking and laundry), it is considered property income.
If you provide additional services, such as cleaning, security and meals, your rentals may be considered a business and the income generated to be business income.
To help you distinguish between them, see Part 2 of Business and Professional Income (IN-155-V).
You must report all your rental income from property according to the instructions for line 136 in the guide to the income tax return (TP-1.G-V).
You rent out 40% of your residence on a weekly basis. Your gross rental income for the year is $5,600.
To rent out that part of your residence, you spent $250 on advertising and $500 on various supplies (soap, toilet paper, bedding, etc.).
During the year, you also paid $2,000 in property taxes and $1,500 in electricity and heating costs for the entire residence.
|Gross rental income||$5,600|
|Various supplies (100%)||-||$500|
|Property tax ($2,000 x 40%)||-||$800|
|Electricity and heating ($1,500 x 40%)||-||$600|
|Net income to report||=||$3,450|
You rented your cottage for short-term stays nine months last year. You lived in the cottage the rest of the year.
Your gross rental income for the year is $9,500.
To rent your cottage, you spent $475 on advertising and $750 on various supplies (detergent, pillows, etc.).
During the year, you also did $2,500 of maintenance work on your cottage (exterior paint, bathroom sink, window insulation, etc.).
In addition, you paid electricity and heating costs totalling $1,800 for the year.
|Gross rental income||$9,500|
|Various supplies (100%)||-||$750|
|Maintenance and repairs ($2,500 x 9/12)||-||$1,875|
|Electricity and heating ($1,800 x 9/12)||-||$1,350|
|Net income to report||=||$5,050|
If you occasionally rent out rooms (for example, during an annual festival), you are not required to include this rental income in your income if:
- the rental period does not exceed 20 days for the year; and
- you receive no other income from room rentals.
For more information on rental income and the deductions you can claim, see Individuals and Rental Income (IN-100-V).
You can use the number and type of additional services you provide to renters (housekeeping, breakfast, Airbnb stays with host-led activities, guided tours, cooking lessons, guided kayak outings, etc.) to determine whether you are earning business income.
If you are considered to be an individual in business, you must report this income according to the instructions for line 164 in the guide to the income tax return (TP-1.G-V).
For more information on business income, see Business and Professional Income (IN-155-V).
You rent out part of a bed and breakfast establishment on a weekly basis. You live in 40% of the establishment. Your gross rental income (business income) is $26,000 for the year. You spent $200 on advertising, $300 for housekeeping in the rented part and $400 on various supplies (soap, toilet paper, bedding, etc.). During the year, you paid $3,000 in property taxes and $1,000 in electricity and heating costs for the entire building.
|Various supplies (100%)||-||$400|
|Property tax ($3,000 x 60%)||-||$1,800|
|Electricity and heating ($1,000 x 60%)||-||$600|
|Net income to report||=||$22,700|