Short-term rental · Taxation
Renting without the permit your municipality requires no longer costs only a fine. It costs the expenses too.
Two definitions that decide everything
- Short-term rental: the CRA defines it as "a residential property that is rented or offered for rent for a period of less than 90 consecutive days". Note "offered for rent". The listing counts, not only the booking.
- Non-compliant short-term rental: one located in a province or municipality that "does not permit operating the short-term rental at that location", or that "requires registration, a licence, or a permit to operate the short-term rental, and the short-term rental does not comply with all the proper registration, licensing, and permit requirements".
What is denied
Two lines on form T776 do the work:
- Line 9366, non-compliant amount for short-term rentals: "You cannot deduct the non-compliant amount of expenses related to non-compliant short-term rentals." Chart A on the form calculates it.
- Line 9367, non-compliant amount of capital cost allowance: "You cannot deduct the non-compliant amount of CCA related to non-compliant short-term rentals." Chart B calculates it.
The CRA then states the arithmetic plainly: "Your deductible expenses are your total expenses minus your total personal expenses minus your non-compliant amount of expenses for short-term rentals."
It is calculated in days, not in yes or no
The formula compares the number of days in the tax year the property was a non-compliant short-term rental with the number of days it was a short-term rental at all. A property that becomes compliant partway through the year is not denied everything.
What it changes in Quebec
Quebec requires a registration number for tourist accommodation, and many municipalities restrict where it is allowed. Add the declaration of co-ownership, which in many buildings prohibits short-term rental outright. Each of those three layers can turn a rental into a non-compliant one for tax purposes.
Before you buy for short-term rental
Three checks, in this order: what the municipality permits at that exact address, what the provincial registration requires, and what the declaration of co-ownership says. A projected return built on nightly rates but not on those three answers is not a projection, it is a hope.
Where this actually lands: at purchase, not after
These rules have one thing in common. They are not discovered while managing a building, they are discovered while buying one. A lease carrying a void clause, a deposit that was never lawful, a dwelling occupied by a succession, a subdivision project the law has suspended: each of those is sold along with the building.
That is why we read the leases, the building's tax position and the history of notices before making an offer on a plex, never after acceptance.
Three habits before buying a rental property
- Ask for every lease and its schedules, not just the rent roll. The clauses hide in the schedules.
- Have the tax modelled before the offer, including the seller's CCA position and what you intend to do with your own.
- Check what the law still permits for your plan. Repossession, eviction and conversion rules have changed and keep changing.
Related
Frequently asked
What counts as a short-term rental for the CRA?
A residential property rented or offered for rent for a period of less than 90 consecutive days.
What is denied for a non-compliant short-term rental?
The non-compliant portion of expenses (line 9366) and of capital cost allowance (line 9367) on form T776.
Does becoming compliant mid-year help?
Yes. The non-compliant amount is calculated on the number of days the property was non-compliant relative to the days it was a short-term rental.
Sources: the official English version of the Civil Code of Quebec (legisquebec.gouv.qc.ca), the Administrative Housing Tribunal (tal.gouv.qc.ca), Canada Revenue Agency guide T4036 Rental Income and Revenu Quebec, consulted 11 September 2026. This page informs; it is neither legal nor tax advice. For a specific situation, consult a notary, a lawyer or an accountant.
Short-term rental: the full Quebec rules
The Quebec side of compliance is as demanding as the federal tax side. See the 2026 short-term rental rules, what changed on 1 September 2026 and the fines, from $500 to $100,000.
Published by the Loaa & Manseur team, number one team at RE/MAX Platine in 2024 and 2025. Tell us about your project.