Accounting for Short-Term Rental Hosts in BC
Hosting guests by the night looks simple until tax time. Is it rental income or a business? Who collects the sales tax, you or the platform? And is your unit even allowed under local rules, which now affects what you can deduct?
EverStone CPA prepares returns, bookkeeping and sales tax filings for short-term rental hosts throughout British Columbia, online, at fixed fees set in writing.
Quick answer: Most hosts report short-term rental income on Form T776 as rental income. If you provide hotel-like services, it can become business income on a T2125 instead. Either way, check that your rental is allowed where it is. Then sort out GST and PST, because they can apply to stays of less than a month.
Hosts we work with
Short-term rental hosts in BC are usually individuals, couples or small family companies. Some rent out a suite in the home they live in. Others own a cabin or a condo used only for guests.
The tax answer changes with the property, the services you offer and how much you use it yourself, so we start with how your hosting actually works.
- Owners renting a basement or laneway suite in their principal residence
- Families with a cabin or lake property booked between their own visits
- Investors holding one or more units used only for nightly stays
- Hosts who also rent the same unit monthly in the off-season
- Couples who own a rental property jointly and split the income
- Hosts who have never reported the income and want to fix that
T776 or T2125: rental income or a business?
This is the first question for any host, because it changes the form you file, the deductions you claim and whether CPP applies.
Rental income on T776
If you mainly provide the space with basic services such as heat, light, Wi-Fi and cleaning between guests, the income is usually property income. It goes on Form T776 with your personal return, and no CPP is payable on it.
Business income on T2125
If you add services more like a hotel, such as daily cleaning, meals, tours or a front desk, the activity can become a business. It is then reported on Form T2125 and CPP applies to the profit.
Joint owners
Where a property is owned jointly, income and expenses are usually split by ownership share. Each owner reports their part on their own return.
Losses and CCA
On a rental property, capital cost allowance generally cannot create or increase a rental loss. Losses from ordinary expenses can still offset other income if the rental is run to make a profit.
Our rental income tax return service covers T776 filings, and our self-employed tax return service covers hosting run as a business on Form T2125.
Should a host incorporate?
Many hosts ask whether to put a property into a company. For most single-property hosts, the answer is no.
Rental income in a company
Rental income earned in a corporation is often treated as investment income, not active business income. That usually means it does not get the small business rate, so the tax saving people expect may not exist.
Moving a property in
Transferring a property you already own into a company can trigger tax on any gain, plus property transfer tax and mortgage issues. It needs planning before anything is signed.
When it can make sense
A host running a genuine accommodation business with staff and services may be in a different position. We look at your actual operation before recommending a structure.
The guide to passive income and the small business deduction explains the issue. If you do run hosting through a company, the salary vs dividends calculator helps you plan what to take out, and incorporation advice covers the move.
GST, PST and accommodation taxes
Unlike long-term residential rent, accommodation for less than a month is generally taxable for GST. Provincial and local taxes can apply too. Who has to collect them depends on your sales and on how guests book.
GST registration
You must register for GST once your taxable sales pass $30,000 in four consecutive calendar quarters. Below that, you can choose to register. Hosts who are not registered may have GST collected by the booking platform instead.
PST and local accommodation tax
BC applies PST to short-term accommodation, and many communities add a municipal and regional district tax. Some small operators are exempt. Platforms may collect and remit these for bookings made through them.
Direct bookings
Guests who book with you directly, by e-transfer or your own website, are outside the platform’s collection. If you are registered, tax on those stays is your responsibility to charge and remit.
Rules here depend on your registrations and booking channels, so we confirm them for you. Our GST and PST filing service files the returns, and the BC PST guide and GST registration guide give background.
Provincial and municipal rules, and why they affect tax
Short-term rentals in BC now sit under provincial rules as well as local bylaws. Together they can decide whether you may host at all, whether the unit must be your principal residence, and what registration or business licence you need.
Federal tax rules can also deny deductions for a short-term rental operating where it is not permitted. That makes compliance a tax question, not only a bylaw question. Check your own municipality’s rules and the provincial requirements before each season, and keep proof of registration and licences with your records.
We do not give legal advice on bylaws, but we ask about compliance when we prepare your return and flag anything that affects your deductions.
Cleaners, co-hosts and WorkSafeBC
Few hosts do every turnover themselves. How you pay the people who help changes your obligations.
A cleaning company or co-host
An independent cleaning company or co-host who invoices you, sets their own methods and works for other hosts is usually a contractor. Keep their invoices as support for the expense.
Someone you employ
A cleaner you schedule, direct and pay by the hour may be your employee. That means payroll deductions, vacation pay of at least 4%, a T4 by the last day of February, and WorkSafeBC coverage.
Property managers
A manager who collects rent and pays costs for you sends statements. Record the gross income and each expense, not only the net amount deposited.
See employee or contractor and our payroll services if you have staff.
Bookkeeping for platform payouts and direct bookings
Platform payouts arrive net of host fees, sometimes net of taxes, and grouped across several stays. Recording only the deposit understates both income and expenses.
Use the earnings report
Each platform provides an annual earnings summary. We use it to record gross booking income, platform fees, cleaning fees charged to guests and any tax collected for you.
Split personal and rental use
Nights you or family use the property, and space in your own home, reduce the share of expenses you can claim. A simple calendar of rented, personal and vacant nights supports the split.
Repairs versus improvements
Fixing a broken dishwasher is a current expense. A new kitchen is capital and goes through CCA. Keep invoices that show what the work was.
See current vs capital rental expenses. Hosts with several units may want monthly bookkeeping.
Furniture, the building and your principal residence
Furniture, linens in bulk, appliances and electronics bought for guests are capital assets claimed through CCA. The building itself can also be depreciated, but that decision needs care.
If part of your home is rented to guests, claiming CCA on the building can affect the principal residence exemption when you sell. Turning a whole home into a rental, or back again, can count as a change in use with tax consequences. We look at these before you claim, not after.
Read about the principal residence exemption and business use, CCA classes and selling a rental property.
Tax-time checklist for a BC short-term rental host
Gather these before your personal return is due on April 30, or June 15 if you report the hosting as a business.
- Download each platform’s earnings summary. Include gross bookings, fees and any taxes collected for you.
- List direct bookings. Stays paid by e-transfer, card or cash outside a platform.
- Count nights. Rented, personal use and vacant, for the year.
- Collect expense records. Mortgage interest statement, property tax, insurance, utilities, cleaning, supplies and repairs.
- Separate improvements. List furniture, appliances and renovations with dates and costs.
- Check sales tax. Confirm whether your GST and PST registrations and filings are up to date.
- Confirm compliance. Keep your provincial registration and municipal licence numbers with your records.
- Note changes. A new co-owner, a refinance, or a switch to or from long-term tenants.
You may share this checklist with other hosts or link to it: everstonecpa.com/accountant-for-short-term-rental-hosts-bc#year-end-checklist.
What hosts pay for returns and filings
Every fee is fixed in writing before we start. Published starting points:
- Personal T1 with a T776 for one property: from $100, quoted once we see the property details
- Hosting reported as a business on a T2125: commonly $250–$450 per return
- GST and PST registration and filing for hosts: quoted with the return
- Monthly bookkeeping for hosts with several units, sales tax filing included: from $300 a month
- A single question, such as change in use or incorporating: Advice Call at $200 + GST
See full pricing for everything else.
Questions from short-term rental hosts
Do I have to report income from a short-term rental platform?+
Can I deduct my mortgage payments?+
Does the platform handle my sales tax?+
Written and reviewed by a Chartered Professional Accountant at EverStone CPA, an Abbotsford CPA firm working remotely with businesses across British Columbia. Updated . Hosts can read client reviews before sending anything.
Related reading
More for property owners and hosts.
Send an enquiry
Tell us how many properties you host, which platforms you use and whether you are registered for GST or PST. A CPA replies within one business day with the next step and a fixed fee in writing.