If you are considering renting out your personal family residence on a short term basis, make sure you know your Legal, Liability and Tax risks before jumping into this new risky endeavour:
1. Legality
The rise in popularity of Airbnb and other sites hasn't been without its controversy. There are concerns that short-term rentals threaten the jobs of hotel workers, and that a short-term rental doesn't have to pass the same certifications and inspections of regular hotels. Finally, many investors are buying properties with the intent of renting them out, which takes housing off the market in areas with already limited inventory.
Some cities have enacted restrictions against short-term rentals. You may need to register and get a permit or a license – or you may not be able to host at all. Check with your local government to make sure you understand the Laws.
2. Taxes
Even a short term rental is condsidered income and you will need to disclose that to Revenue Canada. Make sure you consult with a Tax Professional before entering into any short term rental agreements.
3. Additional Costs
Renting out your home could mean an extra insurance bill. Check in advance with your insurance agent to learn what your current policy covers regarding short-term renters and make sure you are covered for this type of rental. They may recommend increasing coverage, as well as your Liabiliy Risk and damage coverage.
4) Know the Company costs before you list on a Website
Airbnb does provide free primary liability coverage for up to $1,000,000 per occurrence, and many of the other sites have partnerships that make it easy to take out additional coverage, if needed.
In addition to insurance, you'll have to pay a percentage of the rental income to the website: Airbnb and FlipKey both charge a 3% host service fee, VRBO has an option to pay-per-booking or an annual subscription fee.