3 tax changes in the fiscal update you may have missed

financialpost.com:

This week’s fall economic statement had very little in the way of tax measures, but there were a few items that may affect you if you own real estate or are considering the succession of your privately owned business.

In an attempt to curb investment in certain residential real estate properties, which some say has led to an increase in the cost of housing in some markets, the federal government announced that starting Jan. 1, 2024, it will deny income tax deductions for expenses incurred to earn short-term rental income, including mortgage interest expenses. This new rule will only apply, however, in provinces and municipalities that have prohibited short-term rentals.

The government also announced it will deny income tax deductions when short-term rental operators are non-compliant with the applicable provincial or municipal licensing, permitting or registration requirements when it comes to their rental properties.

The government’s thinking is that real estate owners will be encouraged to return those properties to the long-term housing market if they are denied the ability to deduct short-term rental expenses.

It cites an example of a Quebec investor, whom we’ll call Jacinthe, who owns three condo units in downtown Montreal, but does not live in any of them. Instead, she rents them out year-round on a digital short-term rental platform such as Airbnb or Vrbo. The condos are in an area of the city that only permits the occasional short-term rental of a primary residence, but she still lists the condos as short-term rentals.

Jacinthe charges an average rent of $250 per night and makes a total of about $120,000 per year from renting the three condos to tourists on vacation in Montreal. Her annual expenses, including