Short-term rental deductions and CCA
Short-term rental hosts can generally deduct the reasonable costs of earning their rental income, from platform fees and cleaning to property tax, insurance and mortgage interest, less any personal-use share. Capital cost allowance on the building and furniture is optional and can affect your principal residence exemption. Short-term rentals that break local rules can lose their deductions for the days they don't comply.
What hosts can generally deduct
Reasonable costs you pay to earn the rental income, for the rental share of the property and the rental share of the year. Keep the receipts and platform statements.
Running the rental
- Booking-platform host and service fees
- Cleaning, laundry and turnover costs
- Guest supplies: toiletries, coffee, paper goods
- Utilities, internet and streaming for guests
- Advertising and photos
Owning the property
- Property tax and strata fees
- Home or rental insurance
- Mortgage interest (not principal)
- Repairs and maintenance that restore, not improve
- Snow removal, yard care and pest control
Admin and compliance
- Provincial registration and business licence fees
- Accounting and legal fees for the rental
- Bank charges on a rental account
- Co-host or property manager fees
- The rental share of your phone
Furniture, appliances and improvements are capital costs: they're claimed over time as capital cost allowance (CCA), not in one year.
Splitting out your own use
Costs that only exist because of guests, such as platform fees and guest supplies, are fully deductible. Costs you share with the rental are split on a reasonable basis that you can explain and apply the same way each year.
For a suite or room in the home you live in, that's usually floor space: the rental area compared with the whole home. For a cabin or condo you also stay in yourself, it's usually the days rented compared with the days you or your family use it.
Renting to family or friends at less than market rent changes the picture: CRA may limit the expenses you can claim. We look at the facts each year.
Example: a guest suite in your home
A labelled example only. The right basis depends on how the space is actually used.
Mortgage interest and repairs
Two of the largest costs for most hosts, and two of the easiest to get wrong.
Interest, not payments
- Interest on money borrowed to buy or improve the rental property is generally deductible.
- The part of each payment that repays principal is not.
- Use the same rental share as your other shared costs.
- Interest on a refinance used for personal spending generally isn't deductible: what the money was used for decides.
Restoring or improving?
- Fixing something back to how it was, such as repainting or replacing a broken tap, is generally a current expense.
- An upgrade or a lasting improvement, such as a new kitchen or an added bathroom, is generally capital.
- Capital costs are added to the property's CCA class and claimed over time.
- Keep invoices that describe the work: the description often decides it.
CCA on the building and furniture
CCA is the tax version of depreciation. Most classes are claimed on a declining balance, and claiming is optional: any amount up to the maximum each year, or none.
| What you bought | Class | Rate | Good to know |
|---|---|---|---|
| Residential building | Class 1 | 4% a year | Each rental building costing $50,000 or more goes in its own class. Land isn't depreciable, so the purchase price is split. |
| Furniture and appliances | Class 8 | 20% a year | Beds, sofas, tables, fridges, washers, televisions and similar items for the rental. |
| Dishes, cutlery and linen | Class 12 | 100% | Also kitchen utensils costing less than $500 each. |
| Land | None | No CCA | Land is never depreciable, for rentals or any other use. |
Special first-year rules can change the amount you claim when you buy something. If your rental is reported as rental income, CCA generally can't create or increase a rental loss. When you sell, CCA you've claimed can come back into income as recapture if the building sells for more than its remaining balance.
Why CCA on your home needs care
When you sell the home you live in, the principal residence exemption can make the gain tax-free. Renting out part of it doesn't automatically change that.
CRA's general position is that the whole home can keep its principal residence status when the rented part is small compared with the whole, you make no structural changes to rent it, and you claim no CCA on it. Claiming CCA on the rented part can mean that part is treated as no longer your principal residence, so part of the gain may be taxable when you sell, along with any recapture.
A few hundred dollars of CCA a year can cost much more later. It's a decision to make with your numbers, not by default in tax software.
A property you don't live in, such as a cabin or condo used mainly for guests, generally isn't your principal residence anyway. Then CCA is a timing choice, not an exemption question.
Before claiming CCA on your home
- How big is the rented part?
- A room or small suite is treated differently from a separate unit or most of the home.
- Did you change the structure?
- Adding a separate entrance, kitchen or wall to create the suite can change the answer.
- How long will you own it?
- The longer you own it and the more it grows in value, the more the exemption is worth.
- Any elections available?
- In some cases an election under the Income Tax Act can help when use changes. They have conditions and deadlines.
General information only. We look at your situation before any CCA is claimed on a home you live in.
No compliance, no deductions
Announced in the 2023 federal budget and now section 67.7 of the Income Tax Act, this rule applies to expenses from the 2024 tax year on. CRA explains it on its sharing economy page. It covers residential property rented, or offered for rent, for less than 90 consecutive days.
A short-term rental is non-compliant on any day it's in a province or municipality that doesn't allow short-term rentals at that location, or that requires registration, a licence or a permit that the rental doesn't have. In BC, that includes the provincial registry and local business licences. In Alberta, it's mainly municipal licences.
For those days, expenses are denied in proportion, including interest and CCA, while the income stays taxable. CRA can reassess this for any year, without the usual time limit.
Example: licensed partway through the year
A labelled example only. For 2024 only, a rental that met all registration and licensing rules by December 31, 2024 was treated as compliant for the whole year.
A plan based on how you host
Pricing is explained on the business membership page. We confirm your price before any work starts.
- How many units you have, and whether you live in one
- Whether you report rental or business income
- The CCA and principal residence decisions involved
- Whether there are past years to catch up or fix
Short-term rental deductions, answered
What expenses can I deduct for a short-term rental?
Generally, the reasonable costs of earning the rental income: booking-platform fees, cleaning and laundry, guest supplies, utilities and internet, insurance, property tax, strata fees, repairs, mortgage interest, licence and registration fees, and accounting fees. Costs that improve the property, and furniture and appliances, are claimed over time as capital cost allowance.
How do I split expenses if I use the property myself?
Expenses only for the rental, such as platform fees and guest supplies, are fully deductible. Shared costs are split on a reasonable basis: floor space for a suite in your home, or days rented compared with days of personal use for a property you also stay in. Your personal share isn't deductible.
Can I deduct my mortgage payments?
Not the whole payment. The interest on money borrowed to buy or improve the rental property is generally deductible, in the same share as your other rental costs. The part of each payment that repays principal isn't deductible. Interest on money you took out for personal use generally isn't deductible either.
What CCA class is a short-term rental in?
A residential building is generally Class 1, at 4% a year on a declining balance. Furniture and appliances are generally Class 8, at 20%. Dishes, cutlery and linen are Class 12, at 100%. Land is never depreciable. Claiming CCA is optional, and on rental income it can't create or increase a rental loss.
Will claiming CCA affect my principal residence exemption?
It can. If you rent part of your home, CRA generally lets the whole home keep its principal residence status when the rented part is small, you make no structural changes and you claim no CCA on it. Claiming CCA on that part can mean part of your gain is taxable when you sell. We look at this before any claim.
What happens if my short-term rental isn't licensed or registered?
Since 2024, section 67.7 of the Income Tax Act denies expenses for a short-term rental on the days it doesn't comply with provincial or municipal rules, such as BC's registry or a city business licence, or where short-term rentals aren't allowed. All the income stays taxable, and CRA can reassess these at any time.
Sources, checked 4 Nov 2026. Rules have exceptions and can change. This page is general information, not legal or tax advice for your situation.
- Income Tax Act s.67.7, laws-lois.justice.gc.ca: short-term rental (under 90 consecutive days), non-compliant short-term rental, the expense formula, 2024 deemed compliance, reassessment at any time. Enacted by S.C. 2024, c. 17 (Bill C-69), for expenses incurred after 2023.
- Income Tax Regulations, C.R.C., c. 945, laws-lois.justice.gc.ca: Schedule II Classes 1 (4%), 8 (20%) and 12 (100%); s.1100(11) CCA limit on rental property; s.1101(1ac) separate class for each rental property of $50,000 or more.
- CRA, Rental Income guide T4036, canada.ca: deductible rental expenses, current and capital expenses, CCA classes, principal residence.
- CRA, Income Tax Folio S1-F3-C2, Principal Residence, canada.ca: renting part of a home, structural changes and CCA.
- CRA, Sharing economy: taxes and the platform economy, canada.ca: reporting short-term rental income, and section 67.7 denying expenses of non-compliant short-term rentals after 2023, with the 2024 exception.
Let's go through your rental deductions
Book a free 15-minute call by video or phone. Tell us about your property, how you use it and what you claimed last year, and we'll explain what we'd do and confirm your price before any work starts.
Which office?
Book a free 15-minute call15-minute calls every weekday at 10 am and 2 pm Pacific (11 am and 3 pm Mountain), except holidays.
Typical next slots, confirmed when you book:
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