A landlord in Ontario rented a condo long-term for nine years, switched it to Airbnb for the final stretch, sold it, and got a bill for roughly $80,000 in HST.

The case is 1351231 Ontario Inc. v The King, 2024 TCC 37. The court held the unit was no longer a residential complex at the moment of sale. It looked like short-term lodging, so the sale was a taxable supply rather than an exempt one. The appeal was dismissed.

Short-term rental income sits in a different tax world from long-term rent. Here is what applies.

Long-term rent is exempt. Short-term rent is not.

Residential rent is exempt from GST/HST where occupancy runs one month or more, or where the rent is $20 per day or less.

Flip either of those and the supply becomes taxable. A unit rented for less than a month continuously, at more than $20 a day, is a taxable supply of short-term accommodation. Nightly and weekly stays qualify. So do most month-minus-a-day arrangements.

Taxable does not automatically mean you charge tax. It depends on the threshold.

The $30,000 threshold

You are a small supplier, and registration is not required, while your worldwide taxable supplies stay at or under $30,000 over the last four consecutive calendar quarters, and also within any single calendar quarter.

Three details hosts get wrong.

• It's all your taxable businesses combined, not the rental alone — a consultant billing $22,000 a year with $15,000 of Airbnb revenue is over the line.
• It's a rolling four-quarter test, not a calendar year test — you watch it quarterly.
• Exceeding it in a single quarter ends small supplier status immediately for supplies made after you cross, with no grace period.

Register once you cross, charge tax on stays, claim input tax credits on your costs, and file returns.

The platform collects for unregistered hosts

Since July 1, 2021, accommodation platform operators are required to collect and remit GST/HST on bookings from hosts who are not registered.

So if you're unregistered and under the threshold, the platform charges the guest and remits. Nothing lands on you, but you also get no input tax credits.

If you're registered, you provide your number to the platform, you collect and remit on your own bookings, and the platform charges tax only on its commission and service fees. Registered hosts claim input tax credits on cleaning, supplies, furniture, repairs and the platform's fees.

Hosts booking direct, off-platform, are on their own entirely. The platform rules cover platform bookings.

Input tax credits and the purchase

Where the property is used 90% or more in taxable short-term accommodation, a registrant claims full input tax credits. Between 50% and 90%, credits are proportional. Where personal use exceeds 50%, no input tax credits on the property purchase.

Claiming an input tax credit on a purchase is a decision with consequences at the other end. Recovering tax on the way in points strongly toward tax being collectible on the way out.

Changing use is a taxable event

A change of 10% or more in the extent of commercial use triggers GST/HST consequences.

Converting an exempt long-term rental into taxable short-term use gives a registrant an input tax credit based on the property's basic tax content. Converting back to exempt long-term use triggers a deemed self-supply and a remittance.

This is the mechanism sitting underneath the Ontario case. Use drives the classification, and the classification is tested at the moment of the transaction, not averaged across your ownership.

If you're running short-term and plan to sell, the timing question deserves a conversation with a GST specialist before you list. On a $600,000 condo the difference is not a rounding error.

Section 67.7: no licence, no deductions

Separate from GST/HST, and hitting harder for many hosts.

Since January 1, 2024, the Income Tax Act denies deductions for non-compliant short-term rentals.

Short-term rental for this rule means a residential property rented or offered for rent for less than 90 consecutive days.

Non-compliant means either the property sits in a province or municipality prohibiting short-term rentals, or the operator does not hold the required registration, licence or permit, or breaches its conditions.

The denial is prorated — denied amount equals the deductible expense multiplied by non-compliant days divided by total days the property was a short-term rental in the year.

Two things make this rule sharper than it first appears. There was a transition rule for 2024 only, treating a property becoming fully compliant by December 31, 2024 as compliant for the whole year — that door is closed. And the normal reassessment period doesn't limit the CRA here; ordinary years close after three, but this one stays open.

In practice, the municipal licence is not paperwork. In cities with active short-term rental bylaws, an unlicensed host with $60,000 of revenue and $45,000 of expenses is taxed on the full $60,000.

What compliance looks like on the ground

• Check the municipal rules first, then the provincial ones, then your condo bylaws and your insurance — Alberta, BC and Ontario municipalities have moved fast on short-term rental licensing, and rules change between seasons.
• Keep the licence number, the issue date and the renewal date in your property file — renewal lapses create non-compliant days, and non-compliant days now have a formula attached.
• Track occupancy by stay length — the one-month line separates exempt from taxable, and the 90-day line drives section 67.7. Both need nightly data, not monthly totals.
• Watch the rolling four quarters — set a reminder to check the trailing total each quarter rather than discovering it in April.
• Track taxable and exempt revenue separately where you run mixed use, such as a long-term basement suite and a short-term upper unit.

The summary

Long-term rent stays exempt and simple. The moment you go short-term, you've taken on a licence obligation, a registration test, a tax collection duty, an input tax credit position, and a materially different answer on the day you sell.

None of it is unmanageable. All of it needs records more detailed than a long-term landlord keeps.

LuxOasisOS tracks revenue and expenses per unit with stay-level detail, so the taxable and exempt split, the trailing four-quarter total and your licence dates live in one place.