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Owning a Vacation Rental in Ontario

Added: Jan 10, 2016
Category: For Vacation Home Owners

Owning a Vacation Rental in Ontario      

The dream of a second home whether it be a part of your financial plan, recreational use or part of your retirement plan, at one point or another if you live in Ontario you think about it! Now with the popularity of Vacation Rentals as an option for accommodation when traveling, popular places to live and play like Niagara are becoming attractive options for where to purchase that second property.

In the Niagara region below the escarpment we get some of the mildest winters in the province. Also we have new hospitals, and are in-between the Buffalo Airport, the Niagara Falls Airport and Toronto International Airport. Easy cross border shopping and traveling is a definite asset!

Vacation Rentals, are typically a break even option with the income mostly used to offset expense of ownership and to also maintain the property in great condition.   Niagara region has been a favourite destination with a 5 star reputation and vacation homes to rent are on the higher end of the scale. The rates for high season are pretty high. Well that’s if you are Canadian. In 2015 that switched and now we are affordable holidays for foreign tourists and we all know that Niagara Falls is on everyone’s bucket list!

So investing in a second home is starting to make much more financial sense now that tourism is back to Niagara in a big way and it’s now covering 12 months of the year!   If you have any hobbies, any interests or just like to get out and walk, Niagara offers it all. Hiking trails, bridge clubs, art instruction, photography, birding, singing clubs, local bands, anything musical, and anything drinkable, scotch, wine, beer!

However if you are interested in purchasing a vacation home and plan to do vacation rental, do your homework. As a vacation rental manager in Niagara-on-the-Lake I have come to realize that setting up yourself for success has to start at the beginning. Get an accountant who can look at your whole financial picture, determine what your goals are for the vacation home and then think about it. Think about how much personal use you will have and the impact on revenue. Ontario is an HST province and in 2007 an information bulletin was published which should be taken into consideration (gi-025-e). The basic premise is to avoid having your second home classified as an asset that attracts HST, you must understand that there is a balance between short term stays and residential/personal use. Also you can’t deduct ITC on capital improvements.  You must track all this carefully and a good accountant is the best person to give advice, not me, not a realtor, not a neighbour and certainly not the person selling the house!

The other myth to dispute is the benefits of websites like Airbnb and Booking.com. These aren’t the only big players in the game. No matter what websites you use to advertise or how you advertise, always have the conversation with the guest before you confirm booking. Sometimes it needs several conversations but it’s important to take the time now to save you the grief later. While our experience has been very good, it’s a lot of hard work to keep up with a home when you have guests leaving at 10:30 am and the next ones knocking on the door for an early check in! It takes a lot to clean and prepare a whole house in between guests, so it’s important that guests behave in a way that permits you to maximize booking nights.   This is one of the keys to a successful vacation home. If you don’t have the time, then hire someone who does, because they can actually pay for themselves with increased booking nights.

Any questions give me a call at 905-468-8985!



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