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A Guide to Rental Property Tax Deductions in New Brunswick

Key Takeaways

  • The Harmonized Sales Tax (HST) in New Brunswick is 10%. This rate applies to goods and services, including short-term rental properties.
  • New Brunswick's government is contemplating regulations on vacation rentals using Airbnb and VRBO. Officials, including Housing Minister Jill Green, are studying these rentals' impact on the housing market. A possible regulation would be to allow homeowners only to rent out their principal residence.
  • If you rent out your place on Airbnb and are not registered, Airbnb will collect provincial taxes, pay them, and report them when income tax is due.

Published on Apr 28, 2024 | Updated on Apr 28, 2024

An outline of the province of New Brunswick with VRBO and Airbnb location pins on it to show short-term rentals in the state.

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In New Brunswick, travelers can enjoy a unique mix of recreation and entertainment—from St. John’s vibrant port and remarkable reversing rapids to the scenic Fundy National Park of Canada and a variety of arts and cultural festivals.

If you’re a short-term rental operator in New Brunswick, learn how to file taxes and maximize your deductions.

What’s considered a short-term rental?

In New Brunswick, a short-term rental (STR) is defined as a property that is leased for a brief period, usually less than a month. Vacation rental properties are typically advertised on VRBO or Airbnb. Familiarize yourself with each provincial government’s rules for STRs.

When should I report the rental income for my short-term rental?

All earnings, including rental income, must be reported to the federal government every year. The deadline for Canadians to file their taxes for the 2023 tax year is April 30, 2024. If you are self-employed, the deadline extends to June 15, 2024—however, payment is due on April 30.

Stay informed with the Canada Revenue Agency (CRA) tax filing deadlines:

February 29, 2024

Retirement Savings Plan (RRSP)
Pool Registered Pensions (PRPP)

April 30, 2024

Deadline to file your taxes for the 2023 tax year.

June 15, 2024

Deadline for married or common-law partners who are self-employed.

Do I always need to report my rental income?

Skipping income taxes during the fiscal period can lead to legal issues. You are exempt from reporting taxes If you split the mortgage bills with a relative or if your rental expenses outweigh income.

How do I report rental income for my short-term rentals?

Use the Canada Revenue Agency forms, such as the T776 Form, to track STR earnings and stay vigilant regarding key income tax deductions like professional fees, business expenses, capital expenses, current expenses, and property taxes.

Your income tax obligations in Canada hinge on your residency status as well, which is determined by the following factors:

  • Your location
  • The duration of your stay
  • Ties to Canada––having family residing in Canada or owning property

If you left Canada to work abroad temporarily, you are still a Canadian resident for tax purposes. If you need more clarification about your current status, use the CRA’s NR73 Form to determine your residency status.

Here are detailed instructions on how to complete a T776 Form. To expedite the process, follow these steps.

Step 1: Gather the proper forms

Having all the essential documents in order, such as rental period logs, receipts, and financial statements, will help you stay organized and quickly complete your T776 Form.

Step 2: Determine if you are earning a rental or business income

As a vacation property owner, if you offer minimal services to guests staying in your rental, the federal government will view your earnings as passive income. 

Operating an active rental business involves providing routine guest services, whether it’s a rental unit or residential property.

For instance, if you provide regular meals and cleaning services at your vacation property, the federal government will accept your rental activity as a business.

When you earn an extra income by collecting money and occasionally cleaning, it is considered passive income.

Step 3: Reporting earnings from short-term rentals

Collect the relevant information on your vacation property and download the T776 Form. Fill in the property details and rental income, and begin itemizing all costs associated with the vacation property.

Key tax deductions for short-term rentals

You can deduct capital expenses if you rent out your residential property or rental units to short-term guests and undertake significant renovations on the vacation property. These expenses are incurred during the reporting period for taxable supplies and enhance the value of your home.

Other deductible expenses you may be eligible for include:

  • Property taxes
  • Insurance premiums
  • Business expenses
  • Repairs and maintenance
  • Capital expenses

Vacation property owners can deduct property taxes when the rental property is being leased.

FAQ: Rental property tax deductions in New Brunswick

The HST in New Brunswick is 10%. Hosts who are registered for these taxes must give Airbnb their tax ID, so Airbnb refrains from collecting taxes from guests.

Short-term rental income is a taxable income. Vacation property owners must submit a tax return to the government of Canada, namely the CRA. If your primary residence is outside of Canada, there may be more tax implications.

New Brunswick may enforce stricter rules with Airbnb and VRBO. The Housing Minister, Jill Green, has stated that they will study how STRs affect the housing market in New Brunswick. 

Some cities may require a permit to operate an STR and require that the owner live in the principal residence or non-residential property they are renting.

Our final thoughts

Keeping track of rental expenses will help you save money during tax season.

If you’re considering managing a long-term rental or prefer renting your principal residence as an STR, explore our guide to help you determine the best option.

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