Saskatchewan is a province brimming with natural marvels. Its vast wheat fields, buzzing cities, and welcoming towns interweave to create a distinctive blend of rural charm and colorful city life.
What’s considered a short-term rental?
Short-term rentals (STR) are any vacation homes leased for fewer than 30 days. Most vacation rental owners use Airbnb or VRBO as an online marketplace.
In Saskatoon, Saskatchewan, starting January 31, 2024, people can only get new licenses to rent out places for short periods if it’s their primary residence. This new and potentially temporary regulation ensures there is enough long-term housing available. Check with your local municipalities to ensure you are complying with local laws.
When should I report the rental income for my short-term rental?
Rental property owners must report all earnings on their income tax return by April 30, 2024, while self-employed taxes are due by June 15, 2024.
Mark your calendar with the following deadline for filing taxes:
February 29, 2024
Retirement Savings Plan (RRSP)
Pool Registered Pensions (PRPP)
April 30, 2024
Deadline to file your taxes for the 2023 tax year.
June 15, 2024
Deadline for married or common-law partners who are self-employed.
When you have a RRSP, those funds will not be taxed.
Do I always need to report my rental income?
Canada’s federal government requires anyone operating a vacation property to report their income to the Canada Revenue Agency (CRA).
Any income earned below the fair market value does not need to be reported, and you can’t claim any deductible expenses on that sum.
If you are splitting the cost of rent with a close relative, like a sibling, child, or parent, or your rental expenses surpass the sum of your rental income, you don’t have to report those earnings.
How do I report rental income for my short-term rentals?
Canada’s federal government encourages vacation rental property owners to use a T766 Form to declare expenses linked to their rental. Saskatchewan’s income tax package is a comprehensive guide that will help you file your taxes. If you are self-employed and overseeing all operations for your vacation rental, you must collect the 5% lodging tax from guests.
To accelerate the process, follow our simple step-by-step guide to get the ball rolling.
Step 1: Gather the proper forms
Organizing your operating expenses and financial statements will make tax filing season feel like a walk in the park. Begin by gathering all your receipts, dates, income, and costs from the start of each year.
Step 2: Determine if you are earning a rental or business income
It’s essential to differentiate between active and passive income derived from rental properties. This distinction carries tax implications. To optimize deductions and present your annual earnings accurately, here are some considerations to help you determine if you are earning a passive or active income.
If you’re a vacation property owner merely offering basic lodging amenities such as heating, electricity, parking, and laundry facilities, your income will typically fall under the passive earnings category.
However, those routinely committed to providing additional services like cleaning, security, or meals operate a full-service business.
Step 3: Reporting earnings from short-term rentals
The Canada Revenue Agency determines the amount of gains and losses to include in your annual taxes. They set the inclusion rate annually, usually at half for the year. Capital losses can be claimed as expenses, but the inclusion rate determines the deductible amount. Here are detailed instructions for completing a T776 Form.
Key tax deductions for short-term rentals
Certain capital expenses are deductible, like home renovations that enhance the property’s value. Additionally, there are other significant deductions for rental expenses that you might be eligible for, including:
- Advertising
- Property insurance
- Interest and bank charges
- Office expenses
- Professional fees
- Management fees
- Maintenance and repairs
- Property taxes
- Travel expenses
- Utilities
- Motor vehicle expenses
- Property management fees
- Applicable soft costs
FAQ: Rental property tax deductions in Saskatchewan
In Canada, you can deduct the cost of repairs, including the labor involved. These deductions are allowed for current expenses, meaning they are necessary for maintaining the property in its original condition.
In many scenarios, you can write off costs to maintain or update your property. Some eligible expenses may include painting your walls, installing a new roof, or updating windows.
In some Canadian provinces, tenants can deduct rent payments as an expense if they are self-employed.
Our final thoughts
If you’re debating whether to turn your place into a long-term or short-term rental, weighing the pros and cons of each is essential. Those leaning towards the long haul will appreciate our rental resources to support them throughout the journey.
