More and more Canadians are renting their homes to travelers via online short-term vacation rental services such as Airbnb, HomeAway, and VRBO. If you are thinking about renting your condo, house or cottage out on a short-term rental site this summer, or any time really, there are some things you should consider:
If you are living in a condominium building this may be contrary to the condo’s declaration and bylaws.
- The condo’s declaration may say that the units are to be used for residential purposes only. There is accepted case law in Nova Scotia and other provinces that says renting a property on a short-term rental site is a commercial purpose. If you are using your unit for commercial purposes this may very well be in contravention of the declaration and bylaws.
- You could be told by the condo’s board to stop renting your property on these websites, and if you fail to comply you could be subject to fines.
You could be in violation of the Municipal zoning bylaws.
- In many zoning areas, commercial purposes are not acceptable. If you are renting out your home or a portion of your home, in an area that is zoned only for residential purposes, this could be in contravention of the municipal zoning laws.
- Using your property for a purpose outside the allowed zoning can lead to some fairly substantial fines from the municipality.
You will not quality for HST exemptions on the sale of your property.
- Normally the sale of a residential property qualifies for an exemption from HST. If you have been renting your property on a short-term rental site, the property is not being used for a residential purpose and the HST exemption no longer applies.
- You will have to pay HST on the portion of the sale price that applies to the area that is used for a non-residential purpose.
- This is income like any other and should be reported to The Canadian Revenue Agency (CRA).
Short-term rentals have become very popular all over the world and because of this, the tourism industry and regulators are taking notice and trying to determine the best way to regulate them. Provincially, in Nova Scotia nothing has been decided, but you can be certain that before too long there will be regulations in place.