Frank Conci of Penticton, British Columbia, built an addition over the garage of his home and tried renting it out long-term.
“After we purposely complied with all the local city building permitting regulations and paying an outrageous annual business license fee, we began renting long-term,” he told The Epoch Times via email. He knew the tenants well, he said, but nonetheless, the suite fell into disrepair within less than three years.
“We are not going to do that again. We can’t afford to,” Mr. Conci said.
He has been renting it out short-term through Airbnb and has found it much easier to maintain it in “pristine condition.” He enjoys providing a space for tourists who prefer Airbnbs to hotels. Some of the benefits over hotels may include price, especially for longer stays, a more “local” experience with stays available in various neighbourhoods, and a more home-like accommodation.
“Short-terms fill a huge need,” Mr. Conci said.
Ottawa introduced measures last week to crack down on short-term rentals, hoping to open them up to long-term renters amid a national housing shortage.
Many cities and provinces across the country have introduced measures to limit short-term rentals, including Vancouver, Toronto, Edmonton, Calgary, Nova Scotia, and Quebec. British Columbia is set to roll out province-wide restrictions in the spring.
The federal initiative will support these local measures. It provides $50 million in funding over the next three years for enforcement, and it denies income tax deductions to short-term rental operators who are not compliant with local regulations.
It will be difficult for operators to prove compliance, says another short-term rental operator in B.C. Municipalities are backlogged on licensing, local regulations are rapidly changing creating confusion and documentation problems, and companies like Airbnb have tax reporting issues to solve, says operator Diane Clark of Vancouver Island.
‘Jumping at This Too Quickly’
The federal measures are set to roll out Jan. 1, 2024, and Ms. Clark says the timeline is unrealistic.“Local rules and regulations are quickly changing and evolving and are very specific from one place to another,” Ms. Clark said. Many municipalities haven’t caught up with licensing or providing other documentation to owners, she noted, and it’s this type of proof-of-compliance the federal government would likely require.
“How are they going to allow owners to prove they are in compliance at tax time?” she said. “They are jumping at this too quickly.”
She said companies that facilitate short-term rentals, such as Airbnb and Vrbo, already have tax-reporting issues.
“Airbnb hasn’t even caught up with the proper reporting structure for PST, GST, and HST filing when collecting and remitting for owners,” she said. Vrbo won’t allow owners to charge tax on bookings, as there’s no way to enter GST and PST on Vrbo’s customer invoices, she said.
“There are already tax issues that these platforms are not able to manage,” she said. Airbnb and VRBO did not reply as of publication to Epoch Times inquiries regarding these tax issues and their opinion of Canada’s regulatory environment for their industry.
Ms. Clark said the Canada Revenue Agency already has its hands full with other issues and she doubts the government will be ready to effectively manage new short-term rental rules come tax time.
Family Cabins, Vacation Properties
Ms. Clark listed off some types of properties currently caught under the upcoming B.C. regulations that she says are only suitable for short-term, not long-term, rental: family cabins, properties in off-grid locations, and yurts are among them.“These owners will also now be impacted by these tax issues if they can’t get a proper registration,” she said. “These properties are not for long-term rentals; they are for personal enjoyment in mainly vacation-type areas or outdoor recreation hubs. Why should these owners now be punished tax-wise for having a family cabin that doesn’t fit the new provincial narrow window of ‘legal’ rentals?”
“Future regulations are anticipated to set out areas or types of accommodation that will be exempt from the principal resident requirement,” reads the act. Such exemptions may apply to 14 designated resort municipalities (such as Whistler), towns with a population lower than 10,000, and agri-tourism accommodations. It will be up to local governments in these regions to opt in to the regulations if they choose.
The regulatory uncertainty is motivating some owners to sell, Ms. Clark said.
“Owners with currently compliant properties in resort destinations, and tourism-zoned properties, such as the Okanagan region, are already jumping to sell their tourism accommodation before the rules come in as they don’t know how it’s going to affect them,” she said.
Mr. Conci said his property in Penticton, which is in the Okanagan, is not yet affected. “But I believe that it is only a matter of time if they are successful with the current attacks,” he added.
