Vacation Rental Sales Tax – Vacation Rental Bylaws – Vacation Rental Property Insurance
Planning to start a Vacation Rental Business in British Columbia? Wondering about some of the rules, regulations and obligations?
As of October 1, 2018, all short-term rental stays in British Columbia are subject to the 8% Provincial Sales Tax (PST) on accommodation and, if the property is located in a participating area, up to 3% Municipal and Regional District Tax (MRDT). More details regarding PST and MRDT on accommodations, including a list of all areas which charge MRDT and description of exemptions, can be found in the BC Ministry of Finance’s online bulletin.
More information on how to register to collect and remit PST and MRDT can be found here.
If you have any questions or require additional information, you may contact Ministry staff toll-free in Canada at 1-877-388-4440, or by e-mailing CTBTaxQuestions@gov.bc.ca.
GST or HST- You must register and begin collecting 5% GST once revenue tops $30,000 in one calendar quarter/year. Revenue is calculated “when the service is delivered,” be sure to consult with your accountant as to whether or not to use the check-in, or check-out day, as the date to calculate your revenue. If you exceed the $30k, then register right away and begin collecting GST in the next calendar quarter.
Insurance – Most home-owner insurance policies do not cover your home if you offer short-term (under 30 days) rentals. In fact, some policies could be voided altogether, leaving you completely exposed. This is somewhat new for many Insurance companies, so be prepared to shop around. If you live at the property you may be covered under B&B policies, otherwise you may need to purchase a commercial policy for your property. In BC try contacting Capri Insurance for a VR Quote.
Bylaws – As a result of the rapidly growing “sharing economy” phenomena, thousands upon thousands of vacation rentals are being advertised across BC. Most cities however do restrict – and some even disallow – “short term” (under 30 days) rentals in residential zones.
Our observations tell us that many cities rely on these bylaws to protect neighbourhoods from unscrupulous property owners. Bylaw officers will, undoubtedly enforce these ordinances if/when a neighbour files a complaint. This in turn empowers your neighbours greatly, and places the onus squarely on you, to be extremely thoughtful and considerate when deciding the sort of guests you intend to accommodate, and for how long.
Depending on the municipality, short-term rentals may be:
– Allowed under a specific bylaw
– Allowed under a residential zoning bylaw, for example, if the property owner is on site and runs a legal bed and breakfast (B&B)
– Not allowed
– Or simply not yet dealt with
Before you start, be sure to consult with your accountant and your local city bylaws department and finally with your property insurance broker.