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Selling Your Airbnb property? What You Need to Know About the 13% Tax

If you’re thinking about selling a property in Toronto that you’ve used for Airbnb or other short-term rentals, there’s an important tax consideration to keep in mind. Properties used as rental income sources, especially for extended periods, are subject to a 13% HST when sold. This is unlike typical residential property sales, where HST is usually not applied. The Canada Revenue Agency (CRA) categorizes these properties as commercial assets due to their rental usage, leading to different tax rules that can significantly affect your sale proceeds.

The CRA views properties used for long-term short-term rentals as business assets rather than residential ones. This distinction can come as an unwelcome surprise for property owners who might not anticipate the additional cost. The impact of a 13% HST on your sale can be substantial, potentially affecting your overall profit.

If you’re considering investing in an Airbnb property, we recommend factoring in these potential costs as part of your financial planning. Consult with an accountant or tax professional to ensure you’re fully aware of any tax liabilities before making any final decisions. For investors who find that short-term rentals align with their investment strategy, securing the right mortgage product can still be challenging, as many lenders are reluctant to finance properties intended for short-stay rentals.

At MonsterMortgage.ca, we specialize in finding mortgage solutions tailored to your unique needs. If an Airbnb or short-term rental property is part of your investment plan, we can help explore options like private mortgages, commercial financing, or refinancing to access equity for property investments.

Mortgage options for short-term rental properties can vary, but they often include:

  • Private Mortgages: Private lenders may be more open to financing properties intended for short-term rentals. This option generally comes with higher interest rates and fees but can be viable for short-term needs.
  • Commercial Mortgages: For properties that are primarily intended for short-term rentals, a commercial mortgage may be the right fit, though it typically requires a longer approval process.
  • Refinancing: Leveraging the equity in an existing property to fund a vacation home can give you greater control over rental income usage without affecting your mortgage terms.

For expert mortgage advice tailored to short-term rental properties, reach out to us today: https://monstermortgage.ca/contact/

We’re here to provide you with the guidance and support you need to make informed financial decisions.

With experience assisting over 100,000 Canadians, we’re here to help you explore your options, compare rates, and find the mortgage that suits you best.

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