Cape Breton's short-term rental market is booming, but strict regulations are now in place. Here's what you need to know to stay compliant and avoid fines of up to $100,000:
- Registration: All short-term rentals (28 days or less) must be registered with Nova Scotia's Short-term Rentals Registry. Annual fees range from $50 to $500, depending on property type.
- Local Rules: Sydney (CBRM), Baddeck (Victoria County), and Inverness have additional licensing and zoning requirements.
- Taxes: Operators must collect a 15% HST and a 3% Marketing Levy on accommodations.
- Penalties: Non-compliance can result in steep fines and loss of tax deductions.
Follow the rules, display your registration number, and ensure compliance with local bylaws to operate legally. Read on for a detailed breakdown of provincial and local regulations, tax requirements, and tips for successful short-term rental operations.
Halifax Announces Airbnb/Short-Term Rental Registration
Nova Scotia Provincial Rental Rules
In 2023, Nova Scotia introduced a detailed set of rules for short-term rentals. These regulations apply across the province, including Cape Breton Island.
Registration Requirements
Before accepting bookings, property owners must register with the provincial Short-term Rentals Registry. This applies to rentals lasting 28 days or less [2]. By October 2023, over 6,200 properties had been registered in Nova Scotia [3].
Here’s what’s needed for registration:
| Property Type | Required Documentation |
|---|---|
| Primary Residence | - Two documents proving residence (e.g., driver's license, tax return) - Municipal land-use compliance document |
| Personal Vacation Home | - Two documents proving it’s not a primary residence - Municipal land-use compliance document |
| Rental Arbitrage | - Property Owner Consent form - Municipal land-use compliance document |
| Condominium | - Condo Board Consent form - Municipal land-use compliance document |
Each property must display its unique registration number on all advertising platforms, including Airbnb and Expedia [2].
Registration Costs and Penalties
Here’s the fee structure for Cape Breton property owners:
- Primary residence rentals: $50.00 annually
- Commercial rentals (Tier 2): $500.00 annually
- Traditional tourist accommodations (1-4 bedrooms): $50.00 annually
- Traditional tourist accommodations (5+ bedrooms): $150.00 annually [2]
Failing to register can result in fines ranging from $1,000 to $100,000 [4][5]. Operators must renew their registration every year by April 1st, update their details as needed, display valid registration numbers across all listings, and comply with local bylaws.
These rules are especially impactful in Cape Breton communities like Sydney, classified as Tier 2 for commercial short-term rentals. This classification aims to balance tourism with housing availability, particularly in areas facing housing shortages.
These provincial guidelines lay the groundwork for Cape Breton Island's specific local regulations, which will be covered next.
Cape Breton Local Rules by Region
Local rules in Cape Breton build on the provincial framework, adding specific requirements for each region.
Sydney (CBRM) Guidelines
In the Cape Breton Regional Municipality (CBRM), property owners must obtain a Shared Dwelling License before listing their rentals. Here's the fee structure:
| License Type | Initial Fee | Renewal Fee | Additional Room Charges |
|---|---|---|---|
| Basic (up to 4 rooms) | $200 | $100 | N/A |
| Extended (5+ rooms) | $200 | $100 | $50 per extra room (initial) $25 per extra room (renewal) |
The CBRM By-Law Division oversees licensing and conducts annual inspections to ensure compliance.
Baddeck and Victoria County Rules
Victoria County, which includes Baddeck, follows Tier 2 rules for commercial short-term rentals. Operators must coordinate with the Eastern District Planning Commission to meet zoning requirements as outlined by provincial guidelines.
Steps for Baddeck operators include:
- Reaching out to the Eastern District Planning Commission (rentals@edpc.ca) for zoning documentation [7].
- Providing proof of compliance with municipal by-laws.
- Completing provincial registration.
Inverness County Requirements
Inverness County adheres to Tier 2 regulations similar to Victoria County, with rules enforced as of September 30, 2024 [5]. Operators need to:
- Confirm compliance with municipal by-laws.
- Obtain necessary local documentation.
- Complete provincial registration and keep it current.
Provincial registration fees apply.
These rules aim to balance tourism growth with housing availability while ensuring proper management of short-term rentals throughout Cape Breton Island.
sbb-itb-b5e1074
Tax Requirements and Financial Rules
Sales Tax and Tourism Fees
Starting January 1, 2024, operators are required to collect and remit a 15% HST and a 3% Cape Breton Island Marketing Levy (which is also subject to HST) [8][1].
Here’s a breakdown of the fees:
| Fee Type | Rate | Notes |
|---|---|---|
| HST | 15% | Applied to both the accommodation cost and the levy |
| Marketing Levy | 3% | Applies to fixed-roof accommodations |
| Interest on Late Fees | Prime + 4% | Charged on overdue remittances |
Some accommodations are exempt from the Marketing Levy, including those priced at $20 or less per night, student residences, stays exceeding 30 consecutive days, and properties used for medical treatment or housing displaced individuals due to natural disasters.
"The levy is now charged on all fixed-roof accommodations and includes short-term rentals like Airbnb, VRBO, etc. that are registered under the Tourist Accommodations Registration Act. Please note that failing to register can result in significant penalties."
Guest receipts must clearly show the total cost of the accommodation, the Marketing Levy, and the HST applied to both the room rate and the levy. Operators should also familiarize themselves with the required filing procedures and record-keeping standards.
Tax Filing Guidelines
Income from short-term rentals must be reported to the Canada Revenue Agency (CRA) using the T776 Form [9]. Key filing deadlines include April 30 for income tax returns and June 15 for self-employed operators [9].
Property owners can deduct eligible operational expenses such as property taxes, insurance, advertising, maintenance and repairs, business travel, and office supplies. However, beginning January 1, 2024, the CRA will disallow expense deductions for properties that fail to meet provincial or municipal compliance requirements [10].
Operators must keep thorough financial records for at least six years, document all registrations, and use approved platforms for remitting fees. Non-compliance with Marketing Levy remittance can result in fines ranging from $500–$1,000 for a first-time offense and $1,500–$5,000 for repeat violations [8].
Operating Your Rental Successfully
Step-by-Step Registration Guide
Follow these steps to register your Cape Breton short-term rental in line with Nova Scotia regulations:
-
Preparation
Collect the necessary documents, including proof of ownership or consent, proof of residency, and municipal compliance paperwork. -
Complete Online Registration
- Submit your application via the Short-term Rentals Registry.
- Registration fees vary depending on the property type (as detailed earlier).
- Approval usually takes 2–3 weeks [6].
-
Post-Registration Requirements
- Display your registration number on all booking platforms.
- Not displaying a valid registration number could lead to fines of up to $100,000 annually [6].
Once registered, focus on building and maintaining good relationships within your community.
Community Guidelines
Keeping a positive relationship with your community is crucial. Follow local bylaws, especially those related to noise, parking, and occupancy limits. Open communication with both your guests and neighbors goes a long way in preventing conflicts.
To further protect your rental and ensure smooth operations, proper insurance is a must.
Insurance Requirements
Having the right insurance is essential for safeguarding your property and meeting legal requirements. Regular homeowner's insurance often doesn’t cover short-term rental activities [11]. Make sure your policy aligns with both provincial and local standards.
Here’s what your policy should include:
| Coverage Type | Purpose |
|---|---|
| Property Damage | Covers risks like fire, water damage, and theft. |
| Liability | Protects against guest injuries and property damage. |
| Business Interruption | Compensates for lost rental income during necessary repairs. |
| Guest Property | Covers damage to or loss of guests' belongings. |
For extra peace of mind, document your property’s contents, lock away valuables, update access codes after every checkout, and have a clear emergency response plan.
Consider working with local management services such as Casa Scotia to streamline compliance and day-to-day operations.
Summary
Operating a short-term rental on Cape Breton Island requires following both provincial and local rules.
| Requirement | Details | Cost |
|---|---|---|
| Provincial Registration | Register annually through the Tourist Accommodations Registry | Primary residence: $50 (up to 4 rooms) Commercial Tier 2: $500 |
| Marketing Levy | A 3% fee on all fixed-roof accommodations | Subject to HST |
Key steps include:
- Display your registration number on all booking platforms and advertisements.
- Collect and remit the 3% Marketing Levy via the Check-In Analytics platform.
- Keep accommodation records for six years.
- Include the Marketing Levy and HST on all receipts.
Failure to comply can result in fines of up to $100,000 [6]. The Marketing Levy applies to all five Cape Breton municipalities: Cape Breton Regional Municipality, Port Hawkesbury, Victoria County, Inverness County, and Richmond County [1].
Some accommodations are exempt from the levy, such as stays costing $20 or less per night, student residences, and bookings longer than 30 consecutive days [1]. For detailed guidance on levy collection and remittance, reach out to your local municipality.
