If you earn income from renting a property short-term through Airbnb, VRBO, or a similar platform, a significant change to Canadian tax law took effect for the 2024 tax year that Calgary landlords cannot afford to miss. The federal government has introduced rules that deny all expense deductions — including mortgage interest, property taxes, insurance, and depreciation — for short-term rentals that do not comply with provincial or municipal regulations. The income remains fully taxable, but the deductions disappear. For a broader picture of how rental income tax in Calgary works across all property types, see our complete landlord guide.
For purposes of these rules, a short-term rental (STR) is a rental of a residential property (or a portion of it) for periods of less than 90 consecutive days. This captures Airbnb and VRBO-style rentals but not traditional annual leases, which continue to be treated normally.
The rules apply to any STR income reported on a T1 return — whether the property is your principal residence (renting a room or your whole home while you travel), an investment condo, a cottage, or any other residential property.
Under new section 67.7 of the Income Tax Act (introduced through the 2023 Fall Economic Statement and applicable from 2024), expenses related to a non-compliant short-term rental are not deductible in computing income. This means:
The gross rental income is fully included in income. The result is that a non-compliant STR operator pays tax on their entire revenue, not just their profit — potentially creating a tax bill that exceeds the actual cash profit from the rental.
A short-term rental is non-compliant if it operates in violation of a provincial or municipal law that restricts or requires registration for STRs. The key triggering conditions are:
| Scenario | Deductions Allowed? |
|---|---|
| STR with valid city licence, compliant with local rules | Yes — normal rental deductions apply |
| STR in municipality that prohibits all STRs | No — all deductions denied |
| STR without required licence in a city that requires one | No — all deductions denied |
| Long-term rental (90+ days per booking) | Not STR — normal rules apply |
The City of Calgary requires short-term rental operators to hold a valid business licence and comply with land use bylaw requirements. Operators renting entire homes must ensure the property is their principal residence (or meet other zoning conditions). Failure to hold the required licence means the rental is non-compliant under the federal rules, and all deductions are denied.
Airbnb and other platforms are increasingly required to collect and remit Alberta Tourism Levy and GST on behalf of hosts — but the federal income tax rules and deduction denial operate separately from platform remittances.
Short-term rental income (under 30 days per stay) is generally not an exempt residential rental for GST/HST purposes — it is treated more like a hotel service. If your total taxable supplies including STR income exceed $30,000 in any four consecutive quarters, you are required to register for GST and charge 5% GST to guests (Alberta has no provincial sales tax). Failure to register and remit GST is a separate compliance issue from the income tax deduction denial rules.
The new STR deduction denial rules have caught many Calgary property owners off guard — and the difference between compliant and non-compliant treatment can eliminate your entire cash flow on paper. Ensuring your rental is properly licensed, reporting income correctly, managing GST/HST obligations, and determining the optimal rental structure (short-term vs. long-term vs. hybrid) all have significant tax implications. Calgary real estate investors with multiple properties should also consider whether incorporating in Alberta makes sense for their portfolio, and whether our bookkeeping services can bring their rental records up to the standard CRA now expects. If you have STR income on your 2024 return, book a free consultation with our Calgary tax team before you file.