TL;DR — Key Points to Know
- Every dollar of Airbnb income is taxable. Report it on Form T776 as rental income — Airbnb now reports host earnings directly to the CRA, so unreported income will be found.
- Starting with the 2024 tax year, the CRA denies expense deductions for non-compliant short-term rentals. In Toronto that means registered, principal residence only, and within the 180-night cap — or you pay tax on gross income with no deductions.
- Once your Airbnb revenue passes $30,000 in any four consecutive quarters, you must register for GST/HST within 30 days and charge 13% HST yourself. Below that threshold, Airbnb collects and remits it for you.
- Toronto’s Municipal Accommodation Tax is 6% as of August 1, 2026 (down from a temporary 8.5%). Airbnb collects it from guests on platform bookings, but you must still file the city’s MAT report yourself.
- Mortgage interest, condo fees, property tax, insurance, utilities, and your management fee are all deductible — if you are compliant. You cannot use capital cost allowance to create or increase a rental loss.
- This article is general information, not tax advice. Talk to an accountant before you file.
Table of Contents
- The five taxes that touch your Airbnb
- Income tax: reporting your Airbnb earnings
- The deduction-denial rule for unregistered hosts
- Expenses you can deduct
- HST: the $30,000 rule and the Airbnb trap
- Toronto’s 6% Municipal Accommodation Tax
- Renting rooms in your own condo
- Capital gains when you sell
- If you are not a Canadian resident
- Frequently Asked Questions
The Five Taxes That Touch Your Airbnb
This guide breaks down Airbnb tax rules for Ontario condo owners in plain English. Five different taxes can touch your short-term rental, and most owners only think about one of them.
Income tax. Your Airbnb earnings are taxable income, reported on your annual return. This is the big one.
HST. Ontario charges 13% HST on short stays (under 30 days). Depending on your revenue, either Airbnb handles this for you or you must register and handle it yourself.
Municipal Accommodation Tax. Toronto adds 6% on short-term stays. Airbnb collects it from guests on platform bookings, but the filing is still on you.
Capital gains tax. What you owe when you sell the condo. The rules are generous if it is your principal residence and harsher if it is not.
Underused Housing Tax. Only for non-resident owners: 1% of the property value every year on top of everything else.
The rest of this guide walks through each one, plus the deduction rules that decide how much of your income the CRA actually taxes.
Income Tax: Reporting Your Airbnb Earnings
Every dollar your listing earns is taxable income. That includes the nightly rate, cleaning fees, pet fees — everything Airbnb pays out to you. Tips from guests count too.
For most condo owners, Airbnb income is rental income. You report it on Form T776, Statement of Real Estate Rentals, filed with your tax return. On that form you list your gross rental income and subtract your deductible expenses. The CRA taxes the net amount at your marginal rate, on top of your other income.
It becomes business income instead if you provide significant extra services — think daily housekeeping, meals, or concierge-style service. Business income goes on Form T2125, and you also owe Canada Pension Plan contributions on it. A typical condo host who hands guests the keys and cleans between stays is earning rental income, not business income.
Two practical warnings. First, digital platforms including Airbnb are now required to report host earnings directly to the CRA every year. There is no “the CRA won’t notice” strategy anymore — your Airbnb payouts and your tax return will be compared. Second, keep every record: payout statements, expense receipts, your registration number, booking logs. If the CRA asks questions two years later, your memory will not be enough.
The Deduction-Denial Rule for Unregistered Hosts
This is the rule that catches owners off guard. Starting with the 2024 tax year, subsection 67.7(2) of the Income Tax Act denies income tax deductions for expenses tied to non-compliant short-term rentals.
A short-term rental, for this rule, is a residential property rented for fewer than 90 consecutive days. It is non-compliant if the municipality prohibits short-term rentals there, or if the operator is missing a required registration, licence, or permit.
In Toronto, that means three things: you are registered with the city (the 2026 registration fee is $390 a year), the unit is your principal residence, and entire-home rentals stay within the 180-night annual cap. Miss any one of those and your rental is non-compliant for tax purposes.
The penalty is severe. A non-compliant host cannot deduct mortgage interest, property tax, insurance, repairs — anything. You pay tax on the full gross income. Example: $25,000 of Airbnb income with $10,000 of expenses. A compliant host is taxed on $15,000. A non-compliant host is taxed on $25,000.
For partially non-compliant years, the denied amount is prorated by the number of non-compliant days. And there is no time limit: the normal three-year reassessment window does not apply to this rule, so the CRA can come back years later. Registration is not optional paperwork — it is the difference between deducting your expenses and losing all of them.
Expenses You Can Deduct
If your rental is compliant, you can deduct the reasonable expenses of earning the income. For a Toronto condo host, the usual list is:
- Mortgage interest (the interest portion only — principal payments are never deductible)
- Property tax
- Condo fees
- Insurance premiums for the rental activity
- Utilities, internet, and cable you pay for the unit
- Advertising, listing photography, and platform fees
- Your management company’s fee
- Turnover cleaning costs not already covered by the guest’s cleaning fee
- Repairs and maintenance
- The city’s $390 annual registration fee
Capital cost allowance (depreciation on the building) deserves a warning. You can claim it, but you cannot use it to create or increase a rental loss — the CRA specifically forbids that. And when you sell, any CCA you claimed gets “recaptured” and taxed as income. Many owners skip CCA entirely to keep things simple.
If you also live in the condo, split everything. Only the rental portion of shared expenses is deductible — by square footage, by nights rented, or another reasonable method. Keep the math written down; the CRA will ask for it if you are ever reviewed.
HST: The $30,000 Rule and the Airbnb Trap
Ontario charges 13% HST on accommodation for stays of under 30 days. Here is how it works for Airbnb hosts.
If you are not registered for GST/HST, Airbnb collects the tax and remits it to the CRA on your behalf. This has been the default for Canadian listings since July 2022. You do nothing — the tax is added on top of your price at checkout.
The obligation flips at $30,000. Once your taxable revenue passes $30,000 across any four consecutive calendar quarters, you must register for a GST/HST account within 30 days. From then on, you charge the 13% HST yourself, file returns, and remit it. Give Airbnb your GST/HST number so it stops collecting on top of your price — otherwise guests get double-taxed and your listing looks overpriced.
Registration is not all downside: registered hosts can claim input tax credits, meaning the HST you pay on expenses (cleaning supplies, repairs, management fees) reduces the HST you owe.
The real trap is the change of use. Long-term residential rentals are HST-exempt; short-term rentals are treated like a hotel — taxable. Switching a condo from long-term tenant to Airbnb changes its tax status, and the CRA treats that as a deemed sale at fair market value, with HST owing on it. In a 2024 Tax Court case (1351231 Ontario Inc. v. The King, 2024 TCC 37), a landlord who put a former long-term condo on Airbnb was hit with roughly an $80,000 GST/HST bill on the change of use. Before you convert a long-term rental to Airbnb, get an accountant to model the HST consequence. It can dwarf a year’s rental income.
Toronto’s 6% Municipal Accommodation Tax
Toronto layers its own tax on short-term stays: the Municipal Accommodation Tax, currently 6%. It was temporarily raised to 8.5% to fund World Cup preparations, but that increase expired July 31, 2026, and the rate dropped back to 6% on August 1, 2026. If any guide still quotes 8.5%, it is out of date.
For bookings made on Airbnb, Airbnb collects the MAT from the guest and remits it to the city. But — and this surprises owners — collection is not the end of your obligation. Registered Toronto operators must still file a MAT report with the city for each reporting period, even when Airbnb collected the tax. Collection, filing, and remittance are three separate duties.
If you take direct bookings (your own website, repeat guests paying you directly), nobody collects for you: you must charge the 6%, file, and remit it yourself. Keep booking records for at least three years either way. The MAT does not come out of your pocket — it is charged to the guest — but the paperwork is yours.
Renting Rooms in Your Own Condo
Many Toronto owners rent out a spare bedroom while they keep living in the unit. The tax picture is friendlier here.
Because the condo remains your principal residence, selling it later is generally tax-free under the principal residence exemption. You still report the rental income on Form T776 and deduct the rental portion of your expenses (mortgage interest, condo fees, utilities, and so on, split by a reasonable method).
One caution: do not claim capital cost allowance on the part of your home you rent out. Claiming CCA on your principal residence can jeopardize the exemption for that portion when you sell. The small annual deduction is rarely worth the risk.
There is also a regulatory bonus worth knowing: Toronto’s 180-night cap applies to entire-home rentals. Renting up to three bedrooms while you stay in the unit has no night cap. Just make sure your condo board allows it — a board ban overrides everything the city permits.
Capital Gains When You Sell
When you sell the condo, the tax treatment depends on what it was to you.
Principal residence. If the condo was your principal residence for every year you owned it, the sale is generally exempt from capital gains tax. This is the principal residence exemption, and it still applies if you rented out rooms while living there (as long as you did not claim CCA on the rental portion).
Investment condo. If the unit was not your principal residence, half of the capital gain is taxable — the 50% inclusion rate. Note that the federal government’s proposed increase to a two-thirds inclusion rate was cancelled in March 2025, so the 50% rate stands for 2026.
Change of use. Moving out of your condo and turning it into a full-time rental triggers a deemed disposition at fair market value — for tax purposes, it is as if you sold it and immediately bought it back as a rental property. Elections under section 45 of the Income Tax Act can defer this in some cases (up to four years while you are away), but they have strict conditions. This is firmly accountant territory: get advice before you move out, not after.
If You Are Not a Canadian Resident
Non-resident owners face two extra layers. First, 25% withholding tax applies to gross rental income paid to non-residents — your property manager or agent is generally required to remit it monthly, and you file a Canadian return to settle up on the net amount.
Second, the federal Underused Housing Tax charges 1% of the property’s value each year on residential property owned by non-residents and certain others, with an annual filing obligation. Between withholding tax, the UHT, and the regular income tax rules above, non-resident Airbnb hosting in Toronto needs professional structuring from day one.
Frequently Asked Questions
Do I have to report Airbnb income on my taxes?
Yes. Every dollar is taxable, reported on Form T776 as rental income. Airbnb reports host earnings to the CRA directly, so unreported income will be matched against your return.
Is Airbnb income rental income or business income?
Usually rental income (Form T776). It becomes business income (Form T2125, plus CPP contributions) only if you provide significant extra services such as meals or daily housekeeping.
Do I need to charge HST on my Airbnb?
Not personally, until you pass $30,000 in revenue over four consecutive quarters — below that, Airbnb collects and remits GST/HST for you. After that you must register within 30 days and handle the 13% HST yourself.
What happens if I host without a city licence?
Since the 2024 tax year, the CRA denies all expense deductions for non-compliant short-term rentals. You would pay tax on your gross income with no deductions, prorated by non-compliant days, and there is no time limit on reassessment.
Can I deduct my mortgage, condo fees, and property tax?
Yes — mortgage interest, condo fees, property tax, insurance, utilities, advertising, cleaning, repairs, and your management fee are all deductible if your rental is compliant. You cannot use capital cost allowance to create or increase a rental loss.
Will I pay capital gains tax when I sell my condo?
If it was your principal residence the whole time, the sale is generally exempt. For a non-principal-residence condo, half the gain is taxable at the 50% inclusion rate, which remains in effect for 2026.
Taxes are the least fun part of hosting, but they are also the part where mistakes cost the most. A compliant, well-documented Airbnb keeps more of what it earns — which is the whole point. If the bookkeeping, the registrations, and the filings feel like a second job, that is exactly what a Toronto Airbnb management company takes off your plate: licensing compliance, MAT tracking, monthly statements your accountant will actually enjoy reading, and pricing that keeps the revenue coming. See what a Toronto condo can realistically earn — then let’s talk about keeping it.