Are AIRBNB Rentals Taxable? Cra & Révenue Québec Rules Every Host Must Know — A Montreal Cpa Firm Near You Explains

Legal and Regulatory Framework
Airbnb and short-term rental income in Québec is fully taxable under the Income Tax Act and the Taxation Act (Québec). Whether you rent out a room, a basement apartment, an entire home, a condo, or a unit within a duplex or triplex, all amounts received must be declared as rental or business income. CRA and Revenu Québec treat Airbnb hosting as a commercial activity when stays are short-term (less than 30 days) and when services such as cleaning, meals, or concierge support are provided. In Québec, the Tourist Accommodation Act also requires registration numbers for Airbnb units, and Revenu Québec receives hosting data directly from platforms. Many Airbnb hosts mistakenly believe their rental income is casual or exempt, which results in reassessments, penalties, and interest. Airbnb activity affects GST/QST status, rental expense deductibility, capital cost allowance (CCA), principal residence exemption eligibility, and capital gains when the property is eventually sold. Understanding these tax rules is essential for avoiding audit exposure.

Key Court Decisions
In Nguyen v. RQ, the Tribunal ruled that taxpayers must report Airbnb income even if received casually. Failure to report constituted gross negligence. In Rioux v. Canada, a taxpayer claimed Airbnb activity was personal use. The Court held that once guests are paying for stays, the income is taxable, and expenses must be allocated. In Gale v. The Queen, an Airbnb host tried to claim the Principal Residence Exemption after several years of short-term rentals. The Court reduced PRE eligibility proportionately due to commercial use. In Giguère v. Canada, Airbnb activity contributed to commercial characterization of property sales. In Bouchard v. RQ, failure to maintain receipts for Airbnb-related expenses led to denied deductions and increased taxable rental income. These cases show that Airbnb hosts must keep detailed records, allocate expenses, report all platform earnings, and preserve documentation to support their claims.

Why CRA and Revenu Québec Audit Airbnb Hosts
CRA and RQ aggressively audit Airbnb hosts because many underreport income and misunderstand the rules. Authorities receive data directly from short-term rental platforms, municipal registries, and provincial tourism databases. They match platform payouts with tax filings and bank deposits. Short-term rentals produce digital footprints that are easy to audit. Airbnb hosts often misclassify rental income, fail to collect GST/QST, deduct personal expenses improperly, fail to allocate plex expenses correctly, or misapply the principal residence exemption. These faults result in reassessments, taxable recapture, GST/QST penalties, and loss of deductions.

Mackisen Strategy
Mackisen CPA Montreal provides complete Airbnb compliance support. We reconcile platform payout histories, prepare T776 rental statements, determine whether the taxpayer operates a business or rental activity, calculate GST/QST obligations, prepare elections for self-supply rules, allocate expenses for plexes, and analyze principal residence implications. We also design audit-ready recordkeeping systems—including digital storage, metadata preservation, invoice classification, and reconciliation with bank statements—and prepare RL-31 slips for tenants where required. For Airbnb owners who live in the same property, we allocate expenses between personal and rental portions using CRA-accepted methods. Mackisen protects hosts from misclassification, penalties, and disallowed deductions.

Are Airbnb Rentals Taxable?
Yes. Airbnb income is always taxable. The type of tax treatment depends on activity level. If Airbnb is occasional and limited to renting a room without services, it is typically reported as rental income. If the host provides hotel-like services such as daily cleaning, meals, or guest support, CRA may treat it as business income. Revenue includes nightly fees, cleaning fees, platform payments, and any additional guest charges. Airbnb platform payouts must match tax filers’ declared income. CRA audits this closely.

GST/QST on Short-Term Rentals
GST/QST applies to short-term accommodations (less than 30 days). Airbnb hosts must charge and collect GST/QST if they exceed the $30,000 small-supplier threshold. Airbnb may collect GST/QST on behalf of hosts, but hosts remain responsible for their filings. Many Québec hosts misunderstand this rule and assume the platform handles everything. Even if Airbnb collects GST/QST on nightly stays, the host must still register if they exceed the threshold. GST/QST applies to nightly charges, cleaning fees, and guest service fees. Corporations operating Airbnb businesses must register immediately, regardless of thresholds in most cases.

Income Classification: Rental or Business?
Airbnb income may be considered business income if services exceed basic rental activity. This classification influences deduction rules, CCA calculations, GST/QST obligations, CPP/QPP contributions, and expense categorization. Business income classification may also increase audit risks associated with principal residence claims.

Deductible Airbnb Expenses
Hosts may deduct expenses incurred to earn income. These include advertising, Airbnb platform fees, cleaning fees, laundry, property taxes, insurance, mortgage interest, repairs, utilities paid by the host, internet service, landscaping, and guest supplies. Hosts must allocate expenses in mixed-use properties. Plex owners must divide expenses between personal and rental units. Capital improvements such as new furniture, major upgrades, or structural changes must be capitalized.

CCA for Airbnb Units
CCA may be claimed for the rental portion of the property, but doing so may reduce or eliminate the principal residence exemption on that portion when selling the property. Airbnb hosts must carefully decide whether claiming CCA is beneficial. Mackisen evaluates long-term implications before recommending a CCA strategy.

RL-31 for Québec Airbnb Hosts
The RL-31 slip must be issued if a unit is rented as a long-term dwelling on December 31. For Airbnb, this applies only if a guest occupies the property as a long-term tenant. Hosts of exclusively short-term rentals generally do not issue RL-31 slips. However, misclassification can occur when hosts mix long-term and short-term rentals within the same year.

Airbnb and Principal Residence Exemption (PRE)
Airbnb renting affects PRE eligibility. If a taxpayer rents out part of their home frequently or exclusively, they lose PRE eligibility for that portion. If rental usage exceeds incidental or occasional use, CRA may restrict the exemption. If claiming CCA, PRE is reduced. If Airbnb revenue is substantial, CRA may classify the activity as business use, eliminating the PRE entirely for that area of the property. Failure to track Airbnb use periods leads to incorrect PRE claims and reassessments.

Recordkeeping Obligations
Airbnb hosts must keep platform payout reports, cleaning and maintenance receipts, guest messages, booking calendars, utilities, property tax statements, insurance records, and renovation invoices. CRA requires digital copies with original metadata. Missing records result in denied deductions and higher taxable income.

Real Client Experience
A Montréal host failed to report Airbnb income for two years. CRA obtained platform data and reassessed. Mackisen corrected filings and negotiated reduced penalties. A plex owner used Airbnb on one unit without allocating expenses. RQ reassessed capital gains and rental deductions. Mackisen built allocation schedules and reversed part of the reassessment. A host misinterpreted Airbnb’s GST collection. RQ penalized for unfiled GST/QST returns. Mackisen filed late returns and applied for relief. A condo owner who used Airbnb extensively lost PRE eligibility at sale. Mackisen prepared reconstruction and reduced taxable gains.

Common Questions
Do I have to report Airbnb income? Yes. All of it.
Do I need to register for GST/QST? Yes, once you exceed $30,000 or operate commercially.
Can I claim PRE if I use Airbnb? Only with strict limitations.
Do Airbnb services make it business income? Often yes.
Do I need an RL-31? Only for long-term tenants.
Will CRA see Airbnb activity? Yes, through platform data-sharing.

Why Mackisen
With over 35 years of combined CPA experience, Mackisen CPA Montreal ensures full Airbnb compliance by preparing T776 statements, handling GST/QST registration, allocating mixed-use property expenses, protecting PRE eligibility, building audit-proof documentation, and defending taxpayers during CRA and Revenu Québec audits. Airbnb hosts rely on Mackisen to avoid costly errors and maximize legal deductions.