Short-Term Rentals in BC: What CRA Wants to See in Your 2024 Tax Return

If you own a short-term rental property in British Columbia, 2024 was the year the rules changed—and CRA is watching closely. Whether you rent out a condo or a basement suite, your ability to deduct expenses on your tax return now hinges on one key word: compliance.

What Changed in 2024?

CRA introduced a new rule: If your short-term rental isn’t compliant with local laws, you can’t deduct any expenses. That means no write-offs for property taxes, utilities, repairs, or management fees—even if the rental generated income.

What Counts as “Compliant”?

To claim expenses, your property must meet all applicable municipal and provincial requirements, including:

• A valid business license from your local municipality

• Proper zoning or a Temporary Use Permit if required

• Registration with the BC Short-Term Rental Registry (mandatory starting May 1, 2025)

If your property was compliant by December 31, 2024, CRA will treat it as compliant for the full year—thanks to transitional relief.

What You Need to Report

Even though CRA’s T776 form doesn’t ask you to tick a box for “short-term rental,” you still need to:

• Report gross rental income

• Prorate expenses based on personal use vs rental use

• Track available-for-rent days (even if vacant)

• Keep documentation of compliance status

What Happens If You’re Not Compliant?

CRA will deny all expenses for the non-compliant period. For example, if your property was non-compliant for 180 days out of the year, and you incurred $20,000 in expenses:

Non-deductible portion = $20,000 × (180 ÷ 365) ≈ $9,863

That’s nearly $10,000 in lost deductions.

Looking Ahead to 2025

Starting May 1, 2025, all short-term rental operators in BC must register with the provincial STR registry. If you don’t:

• Your listings may be removed from platforms like Airbnb and Vrbo

• You won’t be able to claim expenses on your 2025 tax return

GST Considerations for Short-Term Rentals

If your short-term rental income exceeds $30,000 over four consecutive quarters, CRA requires you to register for GST/HST, charge it on your rental income, and file regular returns. This applies even if a management company handles bookings—unless they’re registered and remitting on your behalf, you’re still considered the supplier.

Once registered, you can also claim Input Tax Credits (ITCs) for GST/HST paid on eligible expenses like management fees, advertising, and repairs. Just make sure your records clearly separate rental-related costs from personal-use expenses.

Final Thoughts

Short-term rentals can be a great source of income—but they come with a growing list of tax and compliance obligations. If you’re unsure whether your property qualifies, or you need help preparing your 2024 return, reach out. I help property owners across BC stay compliant, minimize tax exposure, and sleep better at night.