Owners of second homes rented on platforms such as Airbnb are being hit hard by high property tax increases, the result of a recent legislative change.
Posted at 1:40 a.m.
Updated at 5:00 a.m.
What there is to know
Owners of secondary residences offered for short-term rental are now subject to a commercial rate for property tax in several municipalities in Quebec.
This measure has significant consequences in municipalities where the commercial rate is higher than the residential rate.
Many owners are considering no longer renting for short periods through Airbnb-type platforms, or in some cases doing so illegally, in order to avoid rising property taxes.
The municipal tax bill of these owners has doubled, tripled or even quadrupled, which is causing discontent in several municipalities and has even given rise to legal action in the Îles-de-la-Madeleine.
So-and-so saw his property tax jump from $1,200 to $5,000 in a municipality in the Laurentians. Another talks about “$8,000 in taxes” for a house valued at $244,000 in Mauricie… Testimonies are multiplying in Facebook groups bringing together owners of tourist residences.
How is this possible? These owners are experiencing the repercussions of the legislative changes put in place by the Quebec government at the end of 2022 to better regulate tourist accommodation.
One of the modifications, which has gone largely unnoticed, provides that secondary properties rented for short periods and registered with the Corporation de l’industrie tourisme du Québec (CITQ) are now considered commercial for the purposes of Quebec and municipal tax laws. The change concerns both people who rent their chalet a few days a year and those who have several properties that they permanently offer on platforms.
The case of Gaspé
Since many municipalities have higher tax rates for commercial properties, the bill has exploded for these owners across Quebec.
“In the case of Gaspé, the commercial rate is 4.4 times the residential rate. The tax bills of certain chalets and tourist residences have quadrupled,” notes the mayor of Gaspé, Daniel Côté, in an interview.
In Gaspé as elsewhere, the owners concerned became aware of the increases by consulting their tax notice.
It went under our radar screen […] We understood the impact at the same time as the first tax bills were issued to those who provide short-term accommodation, around March 2024.
Daniel Côté, mayor of Gaspé
In total, 74 properties would be affected in Gaspé, and the number could rise further. Across Quebec, hundreds, if not thousands, of short-term rental owners are affected. The figure is unknown.
The situation does not seem to have changed in Montreal and Quebec, where these properties were subject to a commercial rate for years already.
In Gaspé, owners will even have to pay the retroactive tax increase for 2023, which Mayor Daniel Côté deplores. These are bills of several thousand dollars.
“If we had had the latitude at home, we would have had a very progressive approach in the implementation of this new tax system […] But it was absolutely impossible to do anything. The law says that, the assessors apply the law and elected officials cannot intervene in the work of the assessors. So we find ourselves with our hands tied with these rules that we didn’t see coming. »
Towards a reduction in the number of Airbnbs?
The change also made waves in the Îles-de-la-Madeleine, where 112 owners took legal action against the municipality. In the Islands, the taxes of these owners have tripled. They are seeking to cancel the increase.
In the motion instituting proceedings, the owners’ lawyer notes that several “have abandoned their certificate [de la] CITQ to avoid paying a commercial rate for the year 2024”.
“Other owners, plaintiffs in the proceedings or not, even preferred to sell their residence specifically because of this major increase in their property taxes,” adds the lawyer.
This tax increase in the Islands has eaten away “a very large part, if not all” of the profits generated by short-term rentals. “For some, renting out their residence puts them in a loss-making situation,” the court document states.
The effect these property tax increases will have on short-term rentals remains to be seen. For municipal finances, this is a gain.
When presenting its budget, the municipality of Îles-de-la-Madeleine estimated that it had earned $400,000 more in 2024 thanks to the regulatory change.
Some believe that the price of nights offered on applications such as Airbnb will increase, with owners passing the bill on to customers. “The rental price will explode for those who remain registered!”, recently predicted a Madelinot during a council meeting.
Some, particularly those who only rented for a few days each year, have already announced their intention to abandon their registration with the CITQ and stop hosting, notes the mayor of Gaspé.
“Others said they would do it illegally. I dissuade them from that, don’t go illegal,” says Daniel Côté.
He hopes that those who choose to stop short-term accommodation will not simply leave their second homes abandoned, but will consider renting them out to tenants on a long-term basis.
“We have never had anything against the short term, the tourism industry is important for us,” he says. But there is a severe housing shortage. »
