
As renting rooms AirBNB and other short-term rental sites are becoming more popular we thought we would share some information on the repercussions this might have on your capital gains assessment when you go to sell your house.
This REW article Principal Residence + Short-Term Rentals + Resale = Capital Gains Tax by Kara Kuryllowicz outlines the potential impact of using your house for short-term rentals could have on the amount of capital Gains tax you are assessed when you sell your house.
"Like so many homeowners that rent through AirBnB and comparable websites, Steve, Barbara and Jody consider them their principal residences because they live there more than they live in any other location.
Most Canadians know they’ll pay capital gains tax to the Canada Revenue Agency when they sell an asset, such as their home, or investment for more than they paid. They also know and appreciate the fact their principal residence is exempt.
However not every homeowner that rents part-time realizes their homes’ principal residence status could change because it’s being used differently and that 50% of the gain may be taxable as part of their regular income."
and perhaps most importantly
“When you’re ready to sell your principal residence, the CRA’s perspective on its status is the only one that matters and they assess each situation individually – it’s incredibly complex and subject to interpretation.”
Read Full Article - https://www.rew.ca/news/principal-residence-short-term-rentals-resale-capital-gains-tax
Points to Consider
Before you rent or use your principal residence for business consult with your accountant.
CRA may consider that your principal residence status may change if all or part of your home is used for rental or business purposes depending on if your rental or business use of the property is relatively small in relation to its use as your principal residence.
When it comes time to sell 50% of the gain in value of your home may be taxable as part of your regular income.
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