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If you rent a residential unit in Ontario, you probably never thought to charge HST on the rent. That instinct is correct — but most landlords have no idea why, and that gap causes real problems.
Some landlords register for HST when they shouldn't. Others run short-term rentals and assume they're exempt when they aren't. A few buy new construction rentals and miss a significant rebate they're entitled to. The rules aren't complicated once you see them clearly, but they're easy to get wrong when you're piecing together advice from random forums.
Here is what the Canada Revenue Agency (CRA) actually says, and what it means for landlords in London, St. Thomas, and Strathroy.
The Short Answer: Residential Rent Is HST-Exempt
Long-term residential rent is exempt from HST under the Excise Tax Act (ETA), Schedule V, Part I, Section 6. This applies to:
- Month-to-month tenancies
- Fixed-term leases of any length
- Basement apartments, secondary suites, and rooming houses
- Duplexes, triplexes, and small multi-unit buildings
If you're renting a unit to someone who lives there as their primary residence, you do not charge HST on rent. You also do not collect it. You do not remit it to CRA.
This is not a deduction or a credit — it is an exemption at the source. The supply itself is outside the HST system.
What "Exempt" Means in Practice
There are three HST categories in Canada: taxable, zero-rated, and exempt.
Exempt supplies are not subject to HST, and the provider cannot claim Input Tax Credits (ITCs) on expenses related to those supplies. This matters for landlords: you cannot claim an ITC on the HST you paid to a contractor who did repairs on your residential rental units. The HST on those invoices is your cost — it doesn't get refunded.
Zero-rated supplies are different (exports, basic groceries) — those providers can claim ITCs. Residential rent is not zero-rated. It is exempt. That distinction costs landlords nothing day-to-day, but it matters if you're trying to register for HST to recover renovation costs.
Do Landlords Need to Register for HST?
No — not for residential rental income alone.
If your only income is long-term residential rent, you are not required to register for HST, regardless of how much you earn. A landlord with four houses generating $120,000 per year in rent has zero HST obligations on that income.
Do not register for HST on residential rentals. Registering would create obligations without benefits: you'd be required to file HST returns for income that generates no HST, and you'd create confusion if you mix business and rental activity.
The situation is different if you operate a business alongside your rental — say, you're a contractor or run a commercial property. In that case, you may already be an HST registrant for your business. Your residential rental income remains exempt and is kept separate; you do not charge HST on the rent.
The Short-Term Rental Exception
This is where landlords get into trouble.
If you rent a unit for 30 consecutive days or less, the supply may be taxable. Under the ETA, short-term accommodation is generally not exempt under the residential provisions.
The threshold: If your short-term rental revenue exceeds $30,000 in any 12-month period, you are required to register for HST, charge it on your rental fees, and remit it to CRA.
If you're renting through Airbnb, VRBO, or any other short-term platform and your total revenue crosses $30,000, HST registration is mandatory — not optional.
Airbnb has been collecting and remitting HST on behalf of hosts in Ontario since 2021, but that doesn't mean you're fully off the hook. If you accept direct bookings outside the platform, the same registration threshold applies to your combined income. Check the numbers carefully.
For more on short-term rental obligations in Ontario, including City of London zoning restrictions and Airbnb-specific rules, see Airbnb and Short-Term Rentals in Ontario: What Landlords Need to Know.
Mixed-Use Properties
If your building has both residential and commercial units — for example, a main floor retail space and two residential apartments above — the HST treatment splits by use.
The commercial rent is taxable (you should be charging HST on it). The residential rent is exempt. If you're an HST registrant because of the commercial portion, you file HST returns that reflect this split. The ITCs you can claim on building expenses are prorated based on the percentage of taxable use.
This is one of the few situations where you should speak with an accountant before you set up your bookkeeping. Getting the allocation wrong creates exposure on audit.
The New Residential Rental Property Rebate (NRRPR)
If you purchased or built a new residential unit specifically for long-term rental, you may be entitled to a partial GST/HST rebate from CRA.
Here's the situation this rebate addresses: when you buy a newly constructed home or condo directly from a builder (or build one yourself), you pay full HST on the purchase price. Normally, the builder-buyer receives a rebate for their primary residence. But if you're buying as a landlord — not to live there — that rebate goes away.
The New Residential Rental Property Rebate fills that gap. It gives landlords who purchase new construction for long-term rental a rebate on the federal and provincial components of HST paid on the purchase.
Who qualifies
- You purchased a new residential unit directly from a builder, or built/substantially renovated a unit yourself
- The unit is intended for use as a primary place of residence by a tenant (not you)
- You file the rebate application within two years of the closing date
- You are not a builder who builds for profit (this is for individual landlords acquiring or improving property)
What you get back
The rebate formula is complex and depends on the purchase price, but for a unit valued up to $350,000 (federal threshold), the maximum federal rebate is approximately $6,300. The Ontario provincial portion adds up to $24,000 for units under $400,000.
On a new build in London or St. Thomas, this can be a meaningful amount. Many landlords who buy new construction or build a legal basement apartment miss this entirely because they're focused on the RTA, not CRA.
To apply, file Form GST524 (New Residential Rental Property Rebate Application) with CRA. You may also need Form GST525 if you're also claiming a federal new housing rebate.
Before you keep reading
This is exactly the kind of thing Almost Passive covers every week.
Local market shifts, RTA/LTB changes that actually affect your properties, and real lessons from managing rentals. One short email. No fluff.
If you're considering new construction as part of your portfolio, factor this rebate into your acquisition cost analysis before you close.
HST on Renovation and Maintenance Costs
You pay HST on virtually every expense related to your rental property — contractor labour, materials, appliances, property management fees. That HST is a real cost, and you cannot recover it through ITCs (because your supply is exempt).
However, those HST costs are deductible as part of the underlying expense when you file your T1 rental income (Schedule T776 or the T776 form directly). If you spend $5,000 + $650 HST on a renovation, you deduct $5,650 as a maintenance expense — not just $5,000.
Keep every receipt. HST-inclusive invoices belong in your expense records as the full amount paid. For a complete breakdown of what CRA allows you to deduct against rental income, see Rental Property Tax Deductions in Ontario: A Landlord's Guide.
Common Misconceptions
"If I make over $30,000 in rent, I need to register for HST." No. The $30,000 threshold is for taxable supplies. Long-term residential rent is exempt. You could earn $500,000 in residential rent and have zero HST obligations. The $30,000 threshold applies to short-term rentals or other taxable commercial activity.
"I can register for HST to get my renovation costs back." No. Registering voluntarily would not help you recover ITCs on residential rental expenses, because the underlying supply (your rent) is exempt. You'd be creating filing obligations without a benefit. There is no mechanism to recover HST on expenses tied to exempt supplies by simply registering.
"My property manager charges me HST on their fee — does that mean I'm supposed to charge HST too?" No. Property management is a taxable commercial service. Your property manager charges you HST on their fee, and that is correct — they are providing a business service. You do not pass that cost along as HST on your rent. You simply include the HST-inclusive management fee in your deductible expenses.
"Furnished units are different — I have to charge HST." Not necessarily. Furnished long-term residential rentals are still exempt. Furnishings alone do not make a supply taxable. What matters is the length of the rental (over 30 consecutive days = likely exempt; 30 days or less = potentially taxable).
What Good Record-Keeping Looks Like
Even though you don't collect or remit HST on residential rent, CRA can still audit your rental income. Good records mean:
- Signed lease agreements for every tenant — dated and showing monthly rent
- Rent ledgers — monthly entries showing rent received vs. rent charged
- All expense invoices — HST-inclusive amounts for maintenance, repairs, insurance, management fees
- Bank statements — corroborating deposit amounts against rent received
If CRA ever questions whether a supply should have been taxable (for example, if they suspect you ran short-term rentals), you need documentation to prove the rental was long-term and residential.
For a complete record-keeping system, see Landlord Record Keeping in Ontario.
Local Context: London, St. Thomas, and Strathroy
Most of the HST rules above apply province-wide, but a few local factors are worth noting.
City of London rental licensing: The City of London's Rental Housing Licensing program requires annual renewal and property standards compliance. The licence fee is a deductible expense, and so is the HST you pay on any required inspections or professional work. For details, see City of London Rental Unit Licence.
New construction in London: London's rental market has seen significant new-build activity in the north end and east of the city. If you purchased a new rental unit in 2024 or 2025 and haven't applied for the NRRPR, check your closing documents. The two-year filing window may still be open.
Student rentals near Western and Fanshawe: Student rentals are typically long-term (8–12 month leases). They qualify for the residential exemption. The short-term rental rules do not apply just because the tenant is a student.
When to Get Professional Advice
For most landlords in London and area, the HST picture is straightforward: long-term residential rent, no HST, nothing to file.
You should consult an accountant or tax professional if:
- You're buying new construction as a rental property
- You operate short-term rentals and your revenue is approaching $30,000
- You own a mixed-use property with both residential and commercial tenants
- You're converting a property from personal use to rental use (HST on change-in-use rules apply)
- You operate under a corporation or partnership structure
Getting these situations right at the start saves significantly more than the cost of professional advice.
How Prospera Can Help
Managing a rental property involves more than the tenancy — it means staying on top of compliance, tax implications, and the operational details that add up. Prospera Properties handles property management for small landlords in London, St. Thomas, and Strathroy, Ontario, including record organization, expense documentation, and coordination with your tax professionals.
If you'd like to talk through what full-service management looks like for your properties, visit prosperaproperties.co to get started.
Frequently Asked Questions
Is residential rent in Ontario subject to HST? No. Long-term residential rent is exempt from HST under the Excise Tax Act, Schedule V, Part I. Landlords do not charge, collect, or remit HST on residential rent.
Do I need to register for HST if my rental income is over $30,000? Not if your income is from long-term residential rent. The $30,000 registration threshold applies to taxable supplies. Residential rent is exempt, not taxable. The threshold does not trigger for residential landlords regardless of income.
What about short-term rentals like Airbnb? Short-term rentals of 30 days or less may be taxable. If your short-term rental revenue exceeds $30,000 in any 12-month period, you are required to register for HST and charge it on your rental fees.
Can I claim back the HST I paid on renovations? No. Because residential rent is exempt (not zero-rated), you cannot claim Input Tax Credits on related expenses. The HST paid on renovations and maintenance is part of the expense cost, which is deductible against your rental income on your tax return.
What is the New Residential Rental Property Rebate? It is a CRA rebate available to landlords who purchase or build new residential units for long-term rental. It partially offsets the HST paid on the purchase price. Applications are filed using Form GST524 and must be submitted within two years of closing.
Does a furnished rental unit change the HST rules? Not by itself. Furnished units rented for more than 30 consecutive days are still exempt. The length of the rental determines the HST treatment, not whether the unit is furnished.
Does my property manager charge me HST correctly? Yes. Property management is a taxable commercial service. Your property manager correctly charges HST on their management fees. You include the full HST-inclusive fee as a deductible expense and do not pass it along to your tenant.