Vancouver [Lee Robinson on Unsplash]

Canada introduces tax measures to ease housing shortage

Canada: Lawmakers in Canada have agreed to impose new measures that limit income tax deductions on short-term rentals booked through platforms such as Airbnb and Vrbo, in a bid to ease the country’s affordable housing shortage.

As part of its autumn economic statement unveiled on Tuesday, the federal government ruled that the legislation would come into effect on 1 January 2024 in provinces and municipalities that already restrict short-term rentals and it would also affect deductions including interest expenses.

The report cited cities such as Vancouver, Toronto and Montreal as having “almost surely” increased their amount of short-term rental listings in recent years, with around 18,900 homes estimated as being used for the practice as far back as 2020.

Airbnb, on the other hand, disputes that quote, saying that listings in Toronto and Montreal have gone down over the last three years.

Nathan Rotman, policy lead for Canada at Airbnb, told Reuters: “Home-sharing regulations are not the solution to Canada’s housing crisis. The reality is the majority of Airbnb hosts in Canada share one home to supplement their income and listings represent less than one per cent of the country’s housing stock.

“Many Canadians earn extra income through home sharing to make ends meet at a time of increasing inflation, interest rates and cost of living,” he added.

Meanwhile, Expedia Group brand Vrbo exited the Toronto market in 2021 due to the city’s crackdown on investment properties and so-called ‘ghost hotels’, leaving Airbnb as the only licensed platform to operate short-term rentals in the city at the time. Hosts were required to register their property over a three-month period and were only permitted to rent out a primary residence.

Cities such as Winnipeg and Vancouver have begun introducing hotel-style taxes on short-term rentals over the last five years to encourage fair competition across accommodation segments. The latter is also bringing in an additional 2.5 per cent tax on short-term accommodations to fund the costs of the 2026 FIFA World Cup, which will be co-hosted by Canada, the United States of America, and Mexico.

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