Airbnb Taxes
How Airbnb income is taxed, the 2024 rule for unlicensed rentals, GST/HST on short stays and your home exemption.
The short version
- Airbnb and other short-term rental income is taxable. Most hosts report it as rental income on form T776; if you provide hotel-style services (meals, daily cleaning, tours), it may be business income on form T2125.
- Since 2024, if your short-term rental (under 90 consecutive days) doesn't comply with local licensing, permit or registration rules, or is in a place that bans it, you lose the expense deductions for the non-compliant days. The income is still taxable.
- When you rent part of your own home, you deduct only the rental share of shared costs, and only for the time it was rented or available.
- Short-term accommodation (under a month, over $20 a night) is subject to GST/HST. If you're not registered, the platform usually collects it; once you pass $30,000 or register, it's on you.
- Claiming CCA on your home, or making structural changes for the rental, can cost you part of the principal residence exemption when you sell.
Airbnb Taxes in Canada
Hosting looks simple from the guest's side: a lockbox, fresh towels, a five-star review. From the tax side, it's a rental business with three extra traps: the 2024 rules for unlicensed rentals, GST/HST on short stays, and the effect on your home's tax-free status when you sell. Here's how each works.
Rental Income or Business Income?
| You provide | Usually | Form |
|---|---|---|
| The space, furnishings, basic cleaning between guests, Wi-Fi | Rental income | T776 |
| Meals, daily housekeeping, tours, transportation, concierge-style services | Business income | T2125 |
The difference matters: business income is subject to CPP, and CCA on rental property can't create a rental loss, while business CCA can. Most Airbnb hosts are in the first row.
The 2024 Non-Compliant Rental Rule
For 2024 and later years, a short-term rental is a residential property rented, or offered for rent, for less than 90 consecutive days. It's non-compliant if the province or municipality doesn't allow it, or if you don't meet the local registration, licence or permit requirements. For non-compliant days, expenses aren't deductible:
| Example | Amount |
|---|---|
| Rental expenses for the year (including CCA) | $18,000 |
| Days the property was a non-compliant short-term rental | 120 of 365 |
| Expenses denied (120 / 365) | about $5,920 |
| Expenses you can still deduct | about $12,080 |
Ontario municipalities such as Toronto, Ottawa and many cottage-country townships now license short-term rentals, and some only allow them in your principal residence. Check your municipality's rules before you list, not after; the licence is usually far cheaper than the deductions it protects. The income stays fully taxable either way.
Hosting on Airbnb? Get your numbers right
Enter your income, nights, expenses and whether it's your own home. The SmartFile works out the deductible share, flags non-compliant days, and fills in form T776 for you to check.
Renting Part of Your Own Home
A basement suite or spare room on Airbnb is the most common setup. You split shared costs on a reasonable basis, usually floor area, and by time:
- Deduct the rental share of: mortgage interest (not principal), property tax, home insurance, utilities, internet, and repairs to the rented space.
- Deduct in full: costs only for guests: platform fees, cleaning, linens, toiletries, guest supplies, and the local accommodation tax if you pay it.
- Don't deduct: your own living costs, or improvements (a new roof, a renovation), which are capital and go through CCA instead.
If the space was rented only part of the year, the expense share follows the rental period. Rules on what you can and can't claim are on rental property expenses.
GST/HST on Short-Term Rentals
Unlike long-term residential rent, which is exempt, accommodation for less than a month at more than $20 a night is taxable for GST/HST.
- Not registered: if you rent through a platform like Airbnb, the platform generally collects and remits the GST/HST on your bookings under the digital economy rules.
- Over $30,000 in taxable sales over four consecutive quarters: you must register, and from then on you collect and remit the tax yourself, and can claim input tax credits. See the GST/HST small supplier rule.
- Selling later: a home that was used mainly for short-term rentals by a registrant can have GST/HST consequences on sale or on a change of use. That's a professional question.
Check where you stand with the GST/HST registration calculator.
Get your GST/HST set up right the first time
The GST/HST SmartFile runs both $30,000 tests on your sales, compares the quick method with the regular method, and fills in form GST74 if the quick method wins.
When You Sell: The Principal Residence Exemption
Renting part of your home doesn't usually cost you the principal residence exemption, as long as the rental is small relative to the whole, you made no structural changes to it, and you claimed no CCA on the house. Break any of those three and part of the gain on sale may become taxable. Renting out the whole home, or a separate cottage, is a different calculation. See capital gains on rental property and the rental property sale calculator.
CRA Gets the Platform Data
Short-term rental platforms are covered by the reporting rules for digital platform operators, so your bookings are reported to CRA each year. CRA has also run audit projects on short-term rental hosts. Report the income; keep the expense records; make sure the licence is current. For the general principle, see side hustle taxes.
Host Tax Checklist
- Confirm your municipality's short-term rental rules and get the licence or registration.
- Download your platform earnings summary every January.
- Keep a calendar of booked, available and personal-use days.
- Measure the rented area so your split is defensible.
- Don't claim CCA on your own home without understanding what it does to the exemption.
Before you file, Return Check looks at your T776 for the claims CRA reviews most on short-term rentals.
Airbnb Tax Questions
Do I have to report Airbnb income in Canada?
Yes. Short-term rental income is taxable and is usually reported as rental income on form T776, or as business income on form T2125 if you provide hotel-style services.
Can I deduct expenses if my Airbnb is not licensed?
Not for the non-compliant period. Since 2024, expenses of a short-term rental that does not meet provincial or municipal licensing, permit or registration rules are denied for the days it was non-compliant.
Do I charge GST/HST on Airbnb stays?
Short-term accommodation under a month costing more than $20 a night is taxable. If you are not registered, the platform generally collects the tax. Once you are registered, you collect and remit it yourself.
Does renting a room on Airbnb affect my principal residence exemption?
Usually not, if the rental is a small part of the home, you made no structural changes and you claimed no capital cost allowance on the house.
What expenses can Airbnb hosts deduct?
Platform fees, cleaning, guest supplies and the rental share of mortgage interest, property tax, insurance and utilities, for the rental period.
Sources: CRA, Changes to rules for eligible deductions from short-term rental income; Guide T4036 Rental Income; Platform-based short-term accommodation (GST/HST); Sharing economy. Checked October 2026. Municipal licensing rules change often and vary widely; we don't track them. The GST/HST effect of selling a former short-term rental depends on the facts and is not covered in detail.
Last reviewed October 5, 2026 against CRA and Government of Canada sources. How we check our facts.