Short-Term Rentals & The GST/HST Trap:

Under Canada’s tax rules, not all residential properties are considered “residential” when it comes to GST/HST. If your short-term rental (less than 60 days per stay) operates more like a hotel, the government treats it differently. That means when you sell, GST/HST must be charged, potentially discouraging buyers and leaving you on the hook for unpaid taxes.

In other words, if a building (or part thereof) is used primarily for short-term rentals of less than 60 days, it is not considered a “residential complex.” As a result, the sale of such a property is not exempt. This has significant implications:

• GST/HST must be charged on the sale of the property;
• Buyers intending to use the property as a residence may be discouraged by the added tax cost;
• If the seller fails to collect GST/HST, they remain liable for the unpaid tax — potentially exposing them to tens of thousands of dollars in assessments.

A condo owner in Ottawa learned this the hard way in a recent Federal Court of Appeal case (1351231 Ontario Inc. v. Canada, 2025 FCA 53). They switched their unit from long-term rentals to short-term Airbnb stays, generating over $54,000 in rental income before selling. But the CRA determined that the property no longer qualified as a “residential complex.” As a result, the owner was hit with $77,079 in unpaid GST/HST.

• The appellant purchased the condo in 2008 and leased it out under long-term leases (over 60 days) until February 2017.
• In February 2017, the unit was listed on Airbnb, and was subsequently rented through a series of short-term leases, generating over $54,000 in rental income.
• The final short-term rental ended in February 2018. The unit was listed for sale in December 2017, and sold in April 2018.
• Neither the appellant nor the purchaser remitted GST/HST on the sale.
• The CRA assessed $77,079.64 in GST/HST under the appellant’s annual filing for the period ending May 31, 2018.

1. Short-term rental use can strip GST/HST exemption – If most rentals are under 60 days, your property might not qualify for exemption at sale.
2. Tax responsibility falls on the seller – Even if you don’t charge GST/HST at closing, the CRA can still hold you liable.
3. Brief Airbnb activity still matters – Even a short period of short-term rental use can have long-term tax consequences.

Before selling, review your rental history carefully. If your property has been used for short-term stays, consult a tax professional to ensure you’re not caught off guard by a GST/HST assessment.

Need help navigating the GST/HST implications of property sales or rental use? Contact our Indirect Tax team at Crowe Soberman LLP. 

This article has been prepared for the general information of our clients. Please note that this publication should not be considered a substitute for personalized advice related to your situation.