Real Estate Talk:
Renting a second residence
The advantages, the disadvantages and is there a market?
By Joseph Marovitch
Updated May 1, 2025
You have that beautiful lakeside country home up north or in the townships, which is going to waste because you’re not using it. You’re too busy, or you spend most of your vacation time down south.
The question is, do you sell it or rent it? If you sell it and it is a secondary home, you must pay income tax on it, unless you place the property, as a primary residence, in the name of your spouse or child who is over 18 years of age, and preferably the person with the lowest income. If you do place the name of the owner of the second property as your wife or child, then there are implications that must be discussed with your accountant.
Renting, on the other hand, can be a great option. Is there a market for nice cottages by the lake? The answer is yes, there is a great demand for country cottage rentals.
To rent a country home, there is an issue that must be verified first. Some municipalities do not allow short-term rentals of country homes, therefore, you must check with your municipality if there is a bylaw restricting rentals. If there is no restriction, you must then apply and obtain a permit to operate a rental vacation property from both the local municipality and Tourism Quebec.
Renting… can be a great option. Is there a market for nice cottages by the lake? The answer is yes, there is a great demand for country cottage rentals…
Note that when you rent a home as a vacation property, a lease of 12 months or more falls under the jurisdiction of the Tribunal administratif du logement (TAL); therefore, the lease should be less than 12 months or whatever is permitted according to the municipal bylaws. Country home rental periods are typically a weekend, a week, two or three weeks or a period less than 12 months.
There are several advantages and disadvantages to renting a country home.
Advantages:
- Rental income pays utilities, taxes and upgrades
- You can enjoy the property for part of the year
- All expenses related to renting are tax-deductible
- The property value continues to grow expense-free
Disadvantages:
- Rental property is seasonal
- Risk of property damage
- Payment must be collected before occupancy
- You must collect and pay taxes
- Insurance can be expensive
Solutions to the disadvantages
Seasonal Rental
Since the demand for a vacation property is seasonal, the lessor can adjust the rent according to the seasons. Summer, Christmas/New Year’s, March break and other holidays are considered high season, therefore, the rent should be higher. The rest of the season is considered low season since there is less demand, therefore, you reduce the rent to compensate and continue a cash flow.
‘Since the demand for a vacation property is seasonal, the lessor can adjust the rent according to the seasons.’
Risk of Property Damage
Insist on a refundable damage deposit large enough to cover unforeseen costs due to damage by the lessee. It should be stated clearly in the signed agreement that, should the lessee damage the premises or content, the damage will be deducted from the damage deposit. As well, charge an additional amount to cover the cost of cleaning the property after the lessee departs the premises.
Payment
It is advisable to collect a deposit upon the reservation and the balance of payment one or two weeks before arrival. This way, the lessor does not have to chase the lessee for the rent.
Collection and payment of taxes
All funds should be received before possession. The collected taxes should be put aside in a savings account until they are payable in the quarterly tax report/invoice.
Insurance
Ensure that the amount charged for the rental takes into account insurance costs and is therefore included in the rent.
There are several inexpensive websites to advertise the property on, including:
These sites charge varied amounts to advertise, but they do not insist on a percentage of your income, unlike Airbnb.com and others.
‘When receiving an inquiry, vet the interested party as thoroughly as possible before agreeing to rent the property.’
Vacation homes are rented furnished. You can offer additional services such as firewood delivery, internet, TV and phone, and charge accordingly.
When receiving an inquiry, vet the interested party as thoroughly as possible before agreeing to rent the property. Families with children and responsible adults are usually not a problem. If the inquiry is from a group of student graduates or a group of men off for the weekend, be wary. You want the property to remain in good condition. If there is damage to the property that is beyond the security deposit amount, you do not want to chase the lessee for the money.
Should you have questions or comments, please refer to the comments section at the bottom of the page. As well, to view past articles, click here.
Next topic: Assessing the marketing campaign
State of the market
The Bank of Canada is on the fence as to the question of raising, lowering, or keeping interest rates as is. The current inflation rate is at 2.3%. The current lending rate is at 2.75%. In recent discussions, the council for the Bank of Canada, consisting of high-ranking economists, some were of the opinion that the inflation rate is relatively low and the economy appears to be solid; therefore, to keep on a positive route, it was suggested to lower rates further. Due to the uncertainty and erratic decision-making in the U.S. government regarding tariffs, others thought the Bank of Canada should wait and gather more information. The decision, for now, is to hold rates as they are.
‘The Bank of Canada is on the fence as to the question of raising, lowering, or keeping interest rates as is… The decision, for now, is to hold rates as they are.’
Right now, depending on U.S. policy, rates could go either way. Since U.S. policy is uncertain, most investors, buyers and sellers are in a holding pattern.
However, there are still those who must buy and sell. Those buyers and sellers must be aware of the economic and real estate market conditions and either know them or choose a broker that does, so the property can be strategically priced and marketed to obtain the best price and terms and be protected.
Have a great week.
Image: Lena – StockPholio.net
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Joseph Marovitch has worked in the service industry for over 30 years. His first career was working with families from Westmount and surrounding areas, hosting children between the ages of 6 to 16 as the owner and director of Camp Maromac, a sports and arts sleep-away summer camp established in 1968. Using the same strengths caring for the families, such as reliability, integrity, honesty and a deep sense of protecting the interests of those he is responsible to, Joseph applies this to his present real estate broker career. Should you have questions ,please feel free to contact Joseph Marovitch at 514 825-8771, or josephmarovitch@gmail.com
When you refer to payment of taxes, do you mean GST/TVQ on the amount of the rent charged, or do you mean property taxes?
Is there an obligation to charge GST…?
And if the period of the rental is say only for example 3 months, what expenses are tax deductible ? And should the deduction only be for the same % as the period rented– 25% in my example.?
Hi Linda,
Thank you for your attention to the article and for your questions. In the article, I am referring to capital gains income tax payable on the sale of a vacation rental. However, the owner of a vacation property for rent is obligated to collect and pay GST/TVQ if their income exceeds $30,000. Up to $30,000, the Lessor is not required to collect and pay the taxes. Please note there is a tax called the Hebergement tax of approximately 3.5% that is payable to the government if you are operating a vacation rental. This tax goes to the tourism bureau to pay for promotion of Quebec tourism.
Regarding deductions, if the property is used and marketed as a vacation rental throughout the year, whether it is rented of not, all the expenses are tax deductible. If the property is marketed as for rent 75% of the year, then 75% of expenses are tax deductible.
I would recommend contacting your accountant to know all the implications of changing the use of a second home to a vacation rental.