Airbnb Cleaning Costs and Canada's Non-Compliant Rental Tax Rule

Turnover cleaning is normally one of the largest deductible expenses a Canadian short-term rental host has. Since January 1, 2024, though, that deduction only holds if the rental follows the provincial and municipal rules where it sits. Under section 67.7 of the Income Tax Act, expenses tied to non-compliant short-term rental days, cleaning included, cannot be deducted at all.

This is a plain-language overview for hosts and co-hosts, not tax advice. Your accountant should look at your own numbers, especially if you operate in more than one city.

What section 67.7 actually says

The rule was announced in the 2023 Fall Economic Statement and later written into the Income Tax Act. It targets residential properties rented, or offered for rent, for fewer than 90 consecutive days. That covers almost every Airbnb, VRBO and Booking.com listing in the country.

A short-term rental is treated as non-compliant if, on a given day:

• it operates in a province or municipality that does not allow short-term rentals there, or
• it does not hold the registration, licence or permit that the province or municipality requires.

Municipal rules count. A listing can be fine under provincial law and still be non-compliant because the city requires its own licence, or limits short-term rentals to a host's principal residence.

When a rental is non-compliant, the expenses linked to those days are not deductible. That includes the cleaning invoices, linen service, supply restocking, utilities, mortgage interest, platform fees and the rest of the usual list.

How the proration works

The denial is not all or nothing for the year. It is based on days. The share of an expense that matches the non-compliant days is disallowed, measured against the days the property was in short-term rental use.

A simple way to picture it, using a made-up example: a host spends $1,000 on cleaning in a year and the unit is run as a short-term rental for 200 days. If 50 of those days were non-compliant (say the city licence lapsed and was renewed late), 50 of 200 days is a quarter, so roughly $250 of that cleaning spend is not deductible. The same logic applies to every other expense on the return.

Two details make this more serious than it first looks:

• No normal time limit. The CRA can reassess these denials at any time. The usual three-year window for reassessment does not apply to this rule, so a gap in your licence from years ago can come back with interest attached.
• 2024 had a one-time grace period. A rental that had all of its required registrations, licences and permits in place by December 31, 2024 was treated as compliant for the 2024 year. That relief has passed. For 2025 and 2026, the day-by-day test applies.

Where the local rules come from

Section 67.7 does not set its own standard. It borrows whatever your province and city require. A few examples of the kind of rules that matter:

• Quebec requires a registration number for tourist accommodation, and the number has to appear on the listing. Several Quebec municipalities, including Montréal boroughs, add their own zoning or principal-residence limits on top.
• British Columbia runs a provincial short-term rental registry under the Short-Term Rental Accommodations Act, and in many larger communities the principal-residence requirement limits which homes can be listed at all.
• Ontario leaves most of this to municipalities. Toronto, for example, requires a city registration and limits short-term rentals to the operator's principal residence.

Rules change often, and they vary down to the borough or ward. Check your current status with the city and the province before the year closes, not when the tax slips arrive.

What this means for your cleaning records

The CRA can ask for proof on two fronts: that the expense was real, and that the rental was compliant on the days the expense relates to. Turnover cleaning creates a lot of small, frequent invoices, so loose records add up fast.

Keep these together for each property:

1. Cleaning invoices with dates and the property address. One line per turnover is easiest to match against bookings. A monthly lump sum with no breakdown is harder to defend.
2. The booking calendar export. Platform payout reports and calendar exports show which nights were short-term rental use, which is the denominator in the proration.
3. Registration and licence documents with their dates. Note the issue date, renewal date and any gap. If a licence lapsed, the dates of that gap are exactly what the CRA will prorate against.
4. Linen and supply costs, kept apart from personal spending. If you stay in the property yourself part of the year, separate personal use from rental use.
5. Deep cleans and one-off jobs. A first clean or a seasonal deep clean is usually a larger single invoice. Label it clearly so it is not mistaken for a personal or renovation cost.

Our turnover reports already include photos of the finished property and a dated record of each visit, and the pricing is itemized per turnover. Hosts who send those records to their bookkeeper monthly tend to have an easier time at year end than those who rebuild them from bank statements.

Is the cleaning fee guests pay taxable too?

Yes, in most cases. The cleaning fee a guest pays through the platform is part of what they pay for the stay, so it is rental income on your return. Separately, platforms collect GST/HST on short-term accommodation booked through them, and in Quebec, provincial sales tax and the lodging tax also apply. How that interacts with your own registration status depends on whether you are registered for GST/HST, which is a question for your accountant.

A short year-end check for hosts

Before December 31, run through this list for every listing:

• The provincial registration number is current and shown on the listing where required.
• The municipal licence or permit is current, with no gap since January 1.
• The property still meets any principal-residence rule that applies to it.
• Cleaning invoices for the year match the booked nights.
• Any period when the unit was not compliant is noted, so your accountant can prorate it correctly instead of guessing.

If you find a gap, fixing it now limits the number of non-compliant days going forward. It does not erase days that already passed.

Frequently asked questions

Are Airbnb cleaning costs tax deductible in Canada?

Generally yes, as a rental expense, as long as the rental is compliant with provincial and municipal rules on the days the expense relates to. Under section 67.7, the portion linked to non-compliant days is not deductible. Keep dated invoices tied to the property address so the expense can be matched to specific stays.

Does the non-compliant rental rule apply to rentals of 90 days or more?

No. The rule is aimed at residential properties rented or offered for fewer than 90 consecutive days. A medium-term furnished rental of three months or longer falls outside that definition, although local zoning and lease rules still apply.

What happens if a city short-term rental licence expires for a few weeks?

The expenses for those weeks are prorated out. The CRA compares the non-compliant days to the total days of short-term rental use and disallows that share of each expense. Because there is no normal time limit on these reassessments, document the gap and the renewal date clearly.

Do these rules apply to US hosts?

No. Section 67.7 is Canadian federal law and applies to Canadian rental properties. US hosts have their own rules, such as the treatment of rentals with average stays of seven days or less, and should check them with a US tax professional.

Get a turnover scope with clean records

If you host in Montréal, Toronto or another Canadian city, send the property details, bed and bathroom count and booking pattern through the quote form. We will come back with a written turnover scope and per-turnover pricing, so your cleaning records are easy to match to your bookings. For linen planning, see our linen and laundry guide.