New Tax Coming on AirBnB Condos in MississaugaWritten by Eric Skicki Thursday, April 12th, 2018
Over 3 years ago, we covered in a blog, what was then the current state of short term rentals in Mississauga. The article did spark some interesting debate on whether short term rentals should or should not be allowed. We even had some major news outlets reach out to us to get more information.
Since then, the condo short term rental market has grown significantly. To put into perspective, the leader in this space, website AirBnB, has currently 122 listings for short term apartment rentals in the Square One area, which is a lot considering that a lot of buildings have a no short term rental policy and have started to shut them down. At the same time, there are only 87 listings on REALTOR.ca which are available for lease for a one year term.
Why is this a growing concern for many?
There are 3 main reasons.
Given that there are more and more apartments rented on short term, it is really starting to affect the supply of apartments for those who wish to stay on a long term basis. This in turn drives prices up to a point where many can no longer afford to pay rent. Right now the average 2 bedroom unit in Square One is around $2000/month.
Secondly, people who would typically stay in hotels are now treating these condos as viable alternatives. This is hurting the hotel industry, which have to pay hefty taxes to rent out their space.
Lastly, the residents who live in these buildings argue that they do not want their buildings being treated as hotels by those who rent out units on a weekend basis. It not only creates an unpleasant environment but also puts strain on all the amenities, elevators etc. Owners of units claim that the value of their own units suffer through short term rentals through both wear and tear on amenities, elevators, hallways as well as the image that it gives off.
The Proposed Solution – A New Tax.
Starting July 1st 2018 the City of Mississauga will impose a mandatory 4% tax on all short term rentals.
The money raised from this (which is estimated at almost $10 million a year) will be reinvested in building incentives, to strengthen tourism and to showcase many celebrated attractions – Mayor Crombie announced.
Under this new law, anyone renting for a period that is less than 28 days, will be charged the new tax. It is also important to note that this will affect homeowners who rent out their primary residence including secondary suites and basement apartments.
The fine details of this proposal are yet to be finalized and will be released soon.
Toronto and Vancouver have already put similar tax measures into place and Mississauga being one of the ever fast growing cities will only naturally follow suit.
We encourage all short term condo hosts to speak to their accountants to understand the tax implications this may have on them.
Some condo investors are not happy with the new announcements, citing that this will affect their net profits. How do you feel about this tax? Share your opinion below.
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