While contemplating his experience in building an addition over the garage of his home, Frank Conci of Penticton, British Columbia shared that after complying with local city building permitting regulations and paying an outrageous annual business license fee, he began renting his home long-term. Despite knowing his tenants, the suite quickly fell into a state of disrepair within less than three years. Conci was vehement that he could not afford to go through the long-term route again.
Subsequently, he turned to Airbnb to rent the space short-term. He expressed contentment with the improvement, as the suite was easier to maintain in “pristine condition.” Moreover, he expressed fulfillment in providing a space for tourists who preferred Airbnbs to hotels due to the benefits like price, local experiences, and a homely accommodation.
However, the federal government has introduced measures last week to crack down on short-term rentals with the aim of opening them up to long-term renters to alleviate the national housing shortage. Numerous cities and provinces across Canada have also enforced regulations to limit short-term rentals, which the federal initiative supports with $50 million in funding over the next three years for enforcement. Short-term rental operators are expected to show compliance to local regulations, and those who can’t prove it will be denied income tax deductions. The stringent enforcement of these new regulations has elicited concern from industry experts, who anticipate a chaotic and challenging compliance process with tax requirements.
In British Columbia, these forthcoming restrictions particularly affect a variety of properties that are mainly suitable for short-term rentals. However, these properties will now be impacted by these tax issues, which owners may not be able to register properly. The regulatory uncertainty has prompted owners to sell their previously compliant tourism properties in resort destinations. These sales may intensify, driven by a lack of understanding regarding the potential impact of the regulations. While his property is not yet affected, Conci believes it is only a matter of time before the potential fallout materializes.