Short-term rental taxes, and why the licence matters

Short-term rentals are part of how the South Okanagan hosts its summer visitors. If you rent out a suite, a cottage or part of your home for stays of under 90 days, the tax side has changed in the last few years, and it now depends on whether the rental is properly licensed.

CRA can deny expenses for non-compliant rentals

Starting with the 2024 tax year, expenses for a short-term rental are not deductible for any period when the rental did not comply with the provincial and municipal rules that apply to it, such as licensing, permits or registration. The denial is prorated by the number of days the rental was out of compliance. In practice, that means a host could owe tax on gross rental income with fewer of the usual costs, like mortgage interest, utilities, cleaning and platform fees, set against it. CRA tax tip on short-term rental deductions.

CRA also expects you to keep records showing the rental was licensed or registered, alongside your normal income and expense records.

What applies in Penticton

The City of Penticton requires a business licence for a short-term rental, and the licence number has to appear in every listing and advertisement. Under the city's rules, the rental must be in the operator's principal residence, there is a limit of one short-term rental licence per parcel, and stays are capped at eight guests. Units in a strata also need confirmation that the strata bylaws allow it. City of Penticton short-term rental information.

Provincial rules across BC

Since May 1, 2025, every short-term rental host in BC has had to register with the provincial registry and show the registration number on listings. BC host registration. In some communities, including Penticton and Summerland, the provincial principal residence requirement also applies, which limits short-term rentals to the host's home plus one secondary suite or accessory dwelling. BC principal residence requirement, and Summerland's short-term rental page.

Rules are different in Oliver, Osoyoos and rural areas of the regional district, so it is worth checking with your own municipality or the Regional District of Okanagan-Similkameen.

How we help hosts

• Track rental income and expenses by property, with platform payouts matched to bookings.
• Keep a simple record of licence and registration dates, so compliant days are clear if CRA asks.
• Work out the share of shared costs, like utilities and insurance, that belongs to a suite in your home.
• Prepare the rental section of your T1 return, or your T2 if the rental is held in a corporation.
• Look at GST with you. Most short-term accommodation is taxable for GST, and hosts whose revenue passes the $30,000 small supplier threshold generally have to register. CRA on when to register.

If a past year was not compliant

If your rental ran for part of 2024 or 2025 before it was licensed or registered, the expense rule may apply to those days. We can go through the dates with you, work out what the rule means in your case, and help you file or adjust the returns. We cannot give legal advice on bylaws, but we can make sure the tax side reflects what actually happened.