VRBO / Short-Term Rental Taxes in Canada 2025

Short-Term Rental Income Is Fully Taxable

All income from renting your property on VRBO or similar platforms is taxable in Canada. This includes nightly rental fees, cleaning fees, and any other charges collected from guests. You report net rental income (after expenses) on your T1 personal tax return using Form T776 — Statement of Real Estate Rentals.

Net rental income is 100% included in taxable income — there is no preferential rate like there is for capital gains.

HST/GST on Short-Term Rentals

Rentals of less than 30 consecutive days are generally taxable supplies for HST purposes. Once your total taxable short-term rental revenue exceeds $30,000 across four consecutive quarters, you must register for and collect HST.

VRBO may collect and remit HST/GST on your behalf in some provinces. Check your VRBO agreement and your CRA obligations to understand who is responsible for remittance in your province.

Deductible Expenses for VRBO Hosts

Rental-Use Percentage Calculation

If your VRBO property is also used personally (e.g., a cottage you stay at yourself), you must allocate expenses between personal and rental use. Two methods:

• Time-based: Rental days ÷ total days in year × 100%
• Area-based: If only part of the property is rented, rented area ÷ total area × 100%

Document your personal use days carefully. The CRA may challenge allocations that seem too favourable.

Capital Gains Considerations

For a cottage or investment property (not your principal residence), all capital gains on sale are taxable. As of 2024, capital gains inclusion rate changed to 2/3 for gains over $250,000 (for individuals). Gains under $250,000 remain at 1/2 inclusion.

Your Adjusted Cost Base (ACB) includes the original purchase price plus capital improvements. Keep records of all renovations and improvements — they increase your ACB and reduce future capital gains tax.

Record Keeping for VRBO Hosts

• Download annual payout reports from VRBO each February
• Keep receipts for all rental-related expenses
• Maintain a calendar showing rental days vs. personal use days
• Take photos of improvements with receipts (for ACB)
• Store records for at least 6 years (CRA audit window)

Quarterly Tax Installments

If rental income results in more than $3,000 in taxes owed beyond withheld amounts, you must make quarterly installments. Consider setting aside 25–35% of net rental revenue for taxes throughout the year.