GST/QST Rules for Rental Property Owners in Quebec: When Landlords Must Charge Tax and Claim ITCs/ITRs

Introduction

Rental property owners in Quebec often assume that GST/QST does not apply to residential rentals — but that is only part of the story.
While most long-term residential leases are exempt, commercial rentals, short-term rentals, mixed-use buildings, assignment fees, parking spaces, and furnished units can all trigger GST/QST obligations.
Revenu Québec frequently audits landlords for failing to register, misclassifying rentals, or incorrectly claiming input tax credits (ITCs/ITRs).
This guide explains when landlords must charge GST/QST, what expenses qualify for credits, and which rental activities are considered taxable or exempt.

Legal and Regulatory Framework

Under the Excise Tax Act (GST) and the Quebec Taxation Act (QSTA):

• Residential leases for one month or more are exempt from GST/QST.

• Commercial leases are taxable unless a specific exemption applies.

• Short-term rentals (<30 days) may be taxable, especially when offered through platforms like Airbnb.

• Parking, storage, and certain ancillary fees are taxable even when the rental unit itself is exempt.

• Mixed-use buildings require allocation between exempt (residential) and taxable (commercial) portions.

• ITCs/ITRs can only be claimed on taxable portions of expenses.

Authorities enforce these provisions through:

• ETA s. 6 and s. 123 (definition of exempt supplies)

• ETA s. 169(4) and QSTA s. 39 (documentation for ITCs/ITRs)

• ETA s. 240 (mandatory registration when taxable supplies exceed $30,000)

• ETA s. 286 / QSTA s. 24 (record-keeping obligations)

Key Court Decisions

Courts have ruled that:

• Residential rent remains exempt even if the landlord is GST/QST-registered for other activities — no tax may be charged.

• Parking or storage rented separately must be taxed, even if the tenant also rents a residential unit.

• ITCs/ITRs for expenses related to exempt residential rentals are not permitted.

• For mixed-use buildings, expenses must be prorated based on actual square footage or reasonable allocation.

• Short-term rentals that operate like hotels are considered taxable supplies.

These decisions reinforce that the nature of the supply — not the seller — determines taxability.

Why CRA and Revenu Québec Target These Issues

Authorities focus heavily on landlords because:

• Many believe “rental = tax-free,” which is not always true.

• Commercial landlords often forget to register once rents exceed the $30,000 threshold.

• Mixed-use buildings create complex allocation and ITC entitlement issues.

• Short-term rental operators frequently fail to collect GST/QST.

• Renovation expenses are often claimed incorrectly when units are exempt.

• Assignment fees and transfer payments are commonly misreported.

High-risk situations include:
Commercial units, Airbnb rentals, building conversions, renovated plexes, parking rentals, and landlords with both commercial and residential tenants.

Mackisen Strategy

We help property owners classify rentals correctly, file accurately, and recover eligible credits.

1. Rental Classification Review

We analyze each component of your property:

• Residential units

• Commercial units

• Furnished or short-term units

• Parking and storage

• Mixed-use allocations

2. GST/QST Registration Assessment

We determine:

• Whether registration is required

• Effective date

• Whether voluntary registration would be beneficial for ITC/ITR recovery

3. ITC/ITR Eligibility & Allocation

We review:

• Renovations

• Repairs and maintenance

• Supplies and operating expenses

• Professional fees

• Capital improvements

We allocate deductions between taxable and exempt activities using reasonable methodologies recognized by Revenu Québec.

4. Lease and Invoice Review

We ensure:

• Commercial leases include correct GST/QST language

• Parking or extra fees are taxed correctly

• Residential leases remain compliant with exemption rules

5. Audit Defence for Landlords

If you receive a review or audit notice, we prepare:

• Proper allocation schedules

• Supporting documentation

• Legal arguments referencing ETA and QSTA

• Full representation until resolution

Real Client Experience

A duplex owner rented the bottom unit as residential and the top floor as a photography studio.
They failed to register for GST/QST and did not charge QST on commercial rent.
Revenu Québec assessed more than $8,000 in uncollected tax.
After our intervention, we filed late elections, adjusted allocations, and reduced the assessment significantly by proving partial exempt-use percentages.

This case illustrates the complexity of mixed-use rentals and the importance of proper registration.

Common Questions

1. Do I charge GST/QST on residential rent?
No — long-term residential leases are exempt.

2. Do commercial rentals require GST/QST?
Yes, unless explicitly exempt.

3. Can I claim ITCs/ITRs on building repairs?
Only on the portion attributable to taxable rentals (e.g., commercial units).

4. Are Airbnb and short-term rentals taxable?
Yes, unless the stay exceeds 30 days or meets a specific exemption.

5. Do parking rentals require GST/QST?
Yes, even when attached to an exempt residential lease.

Why Mackisen

With more than 35 years of combined CPA experience, Mackisen CPA Montreal helps businesses stay compliant while recovering the taxes they’re entitled to. Whether you’re filing your first GST/QST return or optimizing multi-year refunds, our expert team ensures precision, transparency, and protection from audit risk.

SEO Setup

Primary Keywords: GST QST rental property Quebec, commercial lease GST/QST rules, rental tax Quebec, ITC ITR landlords, Mackisen CPA Montreal
Secondary Keywords: short-term rental GST QST, mixed-use property tax Quebec, landlord sales tax rules, parking GST/QST Quebec
Meta Description:
GST/QST rules for rental property owners in Quebec — learn when to charge tax, which rentals are taxable, how ITCs/ITRs apply, and how to stay compliant with Revenu Québec