The new version of Form T776 now asks rental property owners to show a breakdown of income and expenses for long-term and short-term rentals. I am curious to see how everone is appraching this. I have a feeling there might be a filing deadline extension this year, but it’s just a guess.
Interesting! Perhaps CRA is trying to catch people who don’t know or don’t realize that short-term rentals should be reported on a T2125?
The CRA will likely initiate an audit project in the future targeting short-term rentals to assess whether rental income has been properly reported and to disallow ineligible expense claims.
No it’s because expenses are denied on short term rentals if they are not licensed or allowed to operate in their jurisdiction startling this year is my understanding.
That doesn’t mean they need a whole new T776. CRA can just as easily deny those expenses when they are reported on a T2125. But, I suspect that many short-term rental owners are uneducated about how/where to report that income properly, not to mention those that may be trying to hide the fact that they are running such a business…hoping CRA will overlook it if they report it as long-term residential rental income.
Rentals being short-term don’t necessarily make it a business. It depends on whether you provide any services outside of the mere space being rented.
I agree that it’s likely related to the new rules re AirBnB/vrBo. It’s easier to narrow down the lucky targets of the new rules when they have to report the short-term rentals on their T776. Also, short term residential rental income has GST/HST implications where long term residential rent doesn’t.
Pretty much short term rentals are business income. All the furniture, linens, and all other accoutrements have to be supplied, along with cleaning services – really just like a hotel, little soaps and shampoo.
Yes, most short-term rentals will be business income, because most short-term rentals also entail other services as you mention. It’s not because they are short-term though. If you did the same thing for a long-term rental, it would also be business income.
Absolutely loving the diligence from everyone on here. I myself am still getting briefed on all the new changes…, but will post my findings if anything sparks my interest!
With regard to short-term rental changes:
https://www.canada.ca/en/revenue-agency/news/newsroom/tax-tips/tax-tips-2025/changes-rules-eligible-deductions-short-term-rental-income.html
Reading the link re short-term rentals, it’s interesting to note that CRA defines a short-term rental as any rental period less than 90 days. I believe it’s 30 days under the Excise Tax Act. CRA is obviously capturing more renters than for GST/HST purposes.
You don’t have to have rented your place for less than 90 days. You just have to have offered it for rent for less than 90 days to be subject to these rules. The obvious question is whether now landlords have to specify, in their advertisements, that they want a tenant for more than 90 days? Otherwise, CRA could assume it’s offered for any rental period, including those less than 90 days and subject just about any landlord/tenant situation to these rules. They could cast a very large net with their wording.
I’m not sure if they add this to all their information sites now but at the end they have a link to encourage people to report people they think are cheating.