Paul Delean: Beware if you plan to rent spaces to tourists

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It sounds so simple – take advantage of Montreal’s cachet as a tourist destination and pocket a few extra dollars by renting out your apartment or the rooms in your house to travelers.

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There’s more to it, however, as hundreds of people have discovered over the past year and a half. Failure to follow government guidelines on short-term rentals can land you on a provincial inspector’s radar and a hefty fine.

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Revenue Quebec recently said it conducted 3,812 inspections and issued nearly 2,000 tickets for offenses related to short-term tourist rentals during the 12-month period ending March 31. There were 1,099 convictions resulting in fines totaling $4.3 million.

Clearly, the government is taking a tougher line on enforcement. The previous year, there were only 142 convictions and $600,000 in fines imposed.

The era of free-for-all in short-term rentals is now a thing of the past. Nowadays, if you plan to host and promote short-term rentals (defined as 31 days or less), you must register and obtain a classification certificate and establishment number from the Corporation of Tourism Industry of Quebec (CITQ) and pay its annual dues.

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You may also be responsible for collecting and remitting the 3.5% provincial accommodation tax unless you use the services of a digital accommodation platform that does this for you. (Landlords who rent only once a year may be exempt.)

Trying to circumvent bureaucracy can result in fines that start at $2,500.

You don’t need to rent a bed, room, apartment, house, cottage, trailer, or yurt to get hot water. The simple fact of advertising it publicly and giving the impression that it is available for short-term rental without having registered it as such puts you on the wrong side of the rules, according to some decisions of the Court of Quebec.

In one case, a professor who moved with her spouse to Ontario during the pandemic and listed her Montreal apartment on Airbnb was fined $2,500 in June 2021. She had contested the charge, arguing that she did not did not intend to rent to tourists and that the eventual occupants were not. But Justice of the Peace Suzanne Bousquet was not convinced. She said anyone looking at the Airbnb listing (as a provincial inspector did) would reasonably conclude that it was a tourist accommodation establishment, and that it did not have a classification certificate to the time. Moreover, the listing did not state that it would not rent to tourists, the magistrate noted.

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The tax aspect of short-term rentals is an entirely different matter.

The Canada Revenue Agency says you are expected to report income from all sources. Revenu Québec makes an exception for people who “occasionally” rent a room in their dwelling for less than 20 days a year.

Claiming you didn’t know you had to report rental income from your primary residence or register your property as a short-term rental is a defense unlikely to find a sympathetic ear in court.

From the moment you advertise a property’s availability for short-term rental, online or otherwise (even a sign on your property meets the definition), the government can monitor to make sure you follow its rules. .

The Montreal Gazette invites readers to ask questions about taxation, investments and personal finance. If you have a question, please email it to Paul Delean at [email protected].