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Caveat emptor! GST may be payable on stort-term rental properties!  Buyer beware!


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Shared on February 6th, 2019

Caveat emptor! GST may be payable on stort-term rental properties!  Buyer beware!

Do you know short-term rentals of less than one month are subject to GST, if the rent charged is more than $20/day. However, you’re only required to charge and remit the tax if you’re a GST registrant. And you need to register for a GST number if your revenues exceed $30,000.
But even more importantly to understand how GST may apply on a purchase of real property used for short-term rental. Used residential properties are exempt from GST. However as soon as you start doing short term rentals this would considered a change of use from residential to commercial. At this point it’s not an issue. Problem arises is in the future, when someone either sell or change the use of the property from commercial to residential. GST is applicable on commercial properties no matter if it’s new or used. And where you change the use of the property there is a deemed sale of the property at current fair market value and GST is payable. Caveat emptor, or, buyer beware! If you are going to buy any residential property, you need to make sure that the sale is not subject to GST. Sometimes AirBnB hosts are stealthy and hide their business. We recommend to get legal advice if you are an owner or a buyer of the real estate used for short term rental.



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