Although this can be a very tedious process, depending on how much time and how much space within your home is being used for AirBnB purposes. No worries, TurboTax takes most of the hard work out of it, which is applied under the Income tab – Rental Properties and start from there.
Airbnb is considered rental income as per the CRA. If you rent out a room, not the entire house, for over 14 days, you pay taxes on the rental amount and you can take business expenses.
However, you cannot deduct 100% of expenses like mortgage interest and property taxes. This must be calculated between personal and business use of your residence.
As a landlord, you’re entitled to claim a number of rental expenses. Which fall under two main CRA-categories: current expenses, which are generally lower cost and re-occur after a short period, and capital costs, which are normally higher and reflect more long-term investments.
Although current expenses can be fully deductible, some will need to be prorated as CCA. Based on the number of days you have rented out your home or space within your home. You’ll have to calculate how many weeks or days of the year you’ve rented and use that percentage to prorate your costs. Example: If you rent 299 days of 365 then you calculate the actual number of nights guest stayed over; say 66 nights, out of the 299, so it would come out to approx. 22 percent of your current expenses that need to be prorated.
If you rent out only part of your house, you’ll have to calculate what percentage of your home you’ve been using for Airbnb and then multiply that by the booked nights in the year. Let’s say you only rented one room and it took up 25 percent of the space. You would be able to deduct 25 percent of his expenses already prorated at 22 percent. The same math applies when figuring out the portion of deductible expenses for things like the cost of washing your guests’ linens and towels with a reasonable computation of how much it cost you to do laundry.
Expenses over $500 to buy furniture for exclusive use by your Airbnb guests qualifies as a capital cost. Repairs and renovations will depend on if they are exclusively into the area within the home that the guests will be using, if it is repairs to the entire house then you cannot deduct them. Yet, upgrades specifically for the guest's area of the home or damage done by them may qualify as a capital expense.
The link below from RQ will help you understand your provincial AirBnB Obligations: https://www.revenuquebec.ca/en/businesses/consumption-taxes/tax-on-lodging/calculating-and-collectin...
From the CRA for more detailed information: https://www.canada.ca/en/revenue-agency/programs/about-canada-revenue-agency-cra/compliance/sharing-...
From TurboTax Tips - Earning Income from AirBnB: https://turbotax.intuit.ca/tips/earning-income-from-airbnb-4176
Furthermore, since this is your first year reporting your Air BnB activities, consider our TurboTax Live Assist & Review option. You can have your return reviewed in full by an expert before filing. And, because you have rental income, the cost of Assist and Review will be tax-deductible on next year’s return. See below:
I'm using TurboTax Live Assist & Review. How do I talk to a tax expert?:
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