Ontario property owners who regularly rent out their homes on platforms like Airbnb could be required to pay 13 percent HST when selling the property, according to a recent court ruling.
HST does not usually apply to the sale of a residential property that has been previously occupied, according to the Canadian Revenue Agency (CRA). But the Tax Court of Canada ruled in March that the sale of a condo unit that had been rented out on Airbnb for several short-term leases was indeed subject to this tax.
That is because properties regularly used as short-term rentals are actually functioning as commercial properties rather than as residential ones, the court ruled. The differentiation between commercial and residential is critical because it activates the obligation to pay federal and provincial tax upon the sale of the property….