The 2023 Fall Economic Statement proposed new rules to deny tax deductions for short-term rentals that do not comply with municipal or provincial rules
We’ve been planning a trip to attend my niece’s wedding this summer. My wife, Carolyn , was speaking with a guy who owns several short-term rental homes. “Do you want a home with a shower or a bath?” the man asked. Since Carolyn is always looking to save money, she asked, “What’s the difference?” There was a pause, then the man replied, “Well, you need to stand up in the shower.”
So the 2023 Fall Economic Statement proposed new rules – detailed in draft legislation released Dec. 20, 2023 – to deny tax deductions for short-term rentals where a taxpayer who owns a property is not complying with municipal or provincial rules. A short-term rental is one of the properties mentioned above that is offered for rent for less than 90 consecutive days. As for being non-compliant, this will include any property that is rented in a province or municipality that does not allow short-term rentals or where the jurisdiction requires a registration, licence or permit to operate a short-term rental and you don’t comply.point of view? You’ll be denied a tax deduction for all or part of your expenses related to the property.
Under the new rules, however, part of your $50,000 in expenses will be denied since you were non-compliant for part of the year. The denied expenses will equal $50,000 multiplied by the fraction 183/366 . That is, one half, or $25,000 of expenses, will be denied. The result? Your taxable income from the rental is no longer $30,000, but $55,000 . The tax owing on $55,000 would be $29,442.
Rental Tax Shower Carolyn Man Expenses Part CFP FCA Ontario
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