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.
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 speaks of “$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 it 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.
Since many municipalities have higher tax rates for commercial businesses, the bill has exploded for these owners across the four corners of 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,” noted 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.
In all, 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 invoices 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 strictly 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. »
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 initiating motion, the owners’ lawyer notes that several “abandoned their [the] CITQ certificate 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 their residence places them in a deficit situation,” we can read in the court document.
What effect these property tax increases will have on short-term rentals remains to be seen. For municipal finances, it is a gain.
Some believe that the price of nights offered on Airbnb-type applications will increase, with owners passing the bill on to customers. “The rental price will explode for those who will remain registered! », recently predicted a Madelinot during a council meeting.
Some, especially 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 have suggested that they would do it illegally. I dissuade them from that, don’t go into illegality,” says Daniel Côté.
He hopes that those who choose to stop short-term accommodation will not simply leave their secondary properties abandoned, but will consider renting them out long-term to tenants.
“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. »