Contact
Contact

CoPilot Tax: Specialized Accounting and Tax Services for Short-Term Rental Operators (STRs) in Canada

The short-term rental (STR) market can be highly rewarding, whether you’re renting out a property through Airbnb, Vrbo, or another platform. However, managing the tax side of your rental income can be challenging. 

Short-term rentals involve unique rules around taxes, including the collection of GST/HST, and understanding these regulations is key to avoiding costly mistakes. At CoPilot Tax, we provide comprehensive accounting and tax services for short-term rental operators to ensure compliance, minimize taxes, and help maximize your returns.

CoPilot Tax: Expert STR Accounting in Canada

Short-Term Rentals: Understanding the Basics

Short-term rentals involve properties that are rented for shorter periods—typically days or weeks rather than months. Unlike traditional long-term rentals, these short-term stays are subject to different tax obligations, including the requirement to collect GST/HST in many cases. This makes managing a short-term rental business a bit more complex, especially with new regulations on the horizon.

 

What Makes Short-Term Rentals Unique?

  • GST/HST Compliance: Short-term rentals are generally considered taxable supplies, meaning you may be required to collect and remit GST/HST to the CRA. This is different from long-term rentals, which are often exempt from GST/HST. Navigating when and how to charge this tax can be confusing, especially when shifting between rental types.
  • Frequent Turnover: STRs experience frequent turnover, which means ongoing maintenance, cleaning costs, and an increased number of transactions that need to be tracked.
  • New Federal Rules on Compliance: Starting January 1, 2024, the Federal government will deny expense deductions for STRs that do not comply with local regulations, making it essential for operators to understand and follow all municipal requirements.

Interview with Costar: GST/HST Implications

We were interviewed by Costar to speak about the GST/HST implications of switching from short-term to long-term rentals. We explained the consequences of not properly handling GST/HST when converting from a short-term rental to a long-term rental. Not charging or incorrectly calculating these taxes can lead to owing the Canada Revenue Agency (CRA) a substantial sum, along with interest on unpaid amounts. This is why getting it right from the start is critical.

New Rules Effective January 1, 2024: Compliance Is Key

The Federal government’s new rules, which are proposed to take effect on January 1, 2024, bring stricter requirements for STR operators. Under these rules, expense claims for short-term rental properties will be denied if the rental is not compliant with local regulations. This means that if you do not have the proper licenses or are not meeting the local requirements for your STR, you could lose out on valuable tax deductions, leading to increased costs and reduced profitability.

How We Help You Stay Compliant and Maximize Deductions:

  • Local Regulation Compliance: We help you understand and comply with municipal requirements for STRs, ensuring you remain eligible to claim expenses and reduce your overall tax burden.
  • Expense Deduction Optimization: If compliant, you can claim a wide range of expenses associated with your STR, such as maintenance, utilities, and marketing costs. We make sure you claim every eligible deduction, helping you maximize your tax savings.
  • GST/HST Guidance: We ensure you understand your GST/HST obligations, assist with registration if required, and help you manage the tax correctly to avoid potential penalties.

Our Services for Short-Term Rental Operators Include:

  • Bookkeeping and Financial Reporting: We help you keep your finances organized, ensuring every transaction is tracked and accounted for, which makes tax time easy and gives you a clear understanding of your rental business’s performance.
  • Tax Preparation and Planning: We ensure your tax returns are accurate and help you plan for taxes year-round, minimizing your tax burden and ensuring compliance with CRA rules.
  • GST/HST Compliance: We help you determine if you need to register for GST/HST, assist with proper collection and remittance, and ensure that you stay compliant to avoid penalties.
  • Expense Tracking: From cleaning and maintenance costs to utilities and platform fees, we ensure that all your eligible expenses are tracked and claimed to reduce your taxable income.

Why Work with CoPilot Tax?

Short-term rental properties can be an excellent source of income, but the financial and tax requirements can be complex and overwhelming without the right support. At CoPilot Tax, we understand the unique challenges that STR operators face and provide specialized services to ensure your rental business thrives.

Our Services for Service-Based Businesses Include:

  • Industry Knowledge: We stay up to date with the latest federal, provincial, and municipal regulations that impact short-term rentals. Our experience allows us to provide the guidance you need to keep your business compliant and profitable.
  • Proactive Tax Planning: We’re here for you all year, not just during tax season. Our proactive approach ensures you’re always prepared and never caught off guard by new regulations or unexpected tax bills.
  • Simple, Practical Guidance: Taxes and compliance can be overwhelming, especially with new rules and changing requirements. We explain everything in clear, easy-to-understand language, so you’re always confident about your financial decisions.

Book a consultation today and let’s ensure your short-term rental business is optimized for tax efficiency, fully compliant, and positioned for long-term success. With CoPilot Tax by your side, you can focus on running your business confidently, knowing that the financial side is fully taken care of.

Get in Touch

Chat with our team of experienced professionals at CoPilot Tax to learn how we can help you save on your taxes.

Helping you keep more of your hard-earned money

Company

CoPilot Tax Newsletter

Subscribe!

Follow Us

Instagram
Copyright® 2024 CoPilot Tax. All Rights Reserved.