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Terrace, Canada Short-Term Rental Regulation: A Guide For Airbnb Hosts

Terrace, British Columbia

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What are Short-Term Rental (Airbnb, VRBO) Regulations in Terrace, British Columbia?

As of May 1, 2024, new short-term rental regulations have come into effect in British Columbia, including in the city of Terrace. These rules, part of the Short-Term Rental Accommodations Act, aim to return more short-term rental units to the long-term housing market and give local governments stronger tools to enforce bylaws.

The key change is that short-term rentals are now restricted to the host's principal residence, plus one additional unit on the same property such as a secondary suite or accessory dwelling. This means investment properties can no longer be used solely for short-term rentals on booking platforms like Airbnb and VRBO.

Terrace is one of 65 communities across BC where these new principal residence requirements apply, as it has a population of over 10,000. Some smaller communities and resort areas are exempt from the rules unless they opt in.

Starting a Short-Term Rental Business in Terrace

Under the new regulations, starting a dedicated short-term rental business with multiple properties is no longer feasible in Terrace. Hosts are limited to renting out their primary home and one secondary unit.

Before listing a short-term rental, hosts should:

  • Ensure their property meets the principal residence requirement
  • Obtain a business license from the City of Terrace
  • Register with the provincial short-term rental registry (launching in late 2024)
  • Check strata bylaws if living in a condo or townhouse
  • Understand tax obligations on the rental income

Fines for non-compliance can range from $500-$5000 per day for hosts, and up to $10,000 per day for corporations. The province is also increasing the maximum fines that local governments like Terrace can impose for bylaw infractions.

Some short-term rental operators are shutting down due to the changes. "I expect business volumes to really plummet as of January and then, basically, I won't have a business as of May 1," said the CEO of a Victoria-based short-term rental company.

The tourism industry association and short-term rental platforms like Airbnb argue the new rules go too far. However, the province believes restricting short-term rentals is necessary to open up more long-term housing during the current crisis. The regulations are expected to return thousands of units to the long-term rental market.

Short-Term Rental Licensing Requirements in Terrace

To legally operate a short-term rental in Terrace, hosts must obtain a business license from the City of Terrace. The licensing process ensures STRs meet safety standards and comply with zoning regulations.

According to the City of Terrace Zoning Bylaw No. 2069-2014, the requirements for a short-term rental business license include:

  1. Completed business license application form
  2. Proof of ownership or permission from the property owner
  3. Parking plan showing dedicated off-street parking for guests
  4. Floor plan of the short-term rental unit
  5. Proof of sufficient liability insurance
  6. Fire and safety inspection of the rental unit
  7. Payment of the annual business license fee

The annual business license fee for a short-term rental in Terrace is $200 as of 2024. Licenses must be renewed each year.

To submit a short-term rental business license application, hosts can visit the Business Licensing counter at Terrace City Hall (3215 Eby Street) or email the completed application package to businesslicensing@terrace.ca. Processing times are typically 2-3 weeks.

Operating a short-term rental without a valid business license is an offense under the City of Terrace's bylaws. Fines for non-compliance start at $500 for the first offense and escalate to $1000 for subsequent violations. The city also has the authority to issue a "cease occupancy" order for unlicensed short-term rentals.

It's important to note that obtaining a business license does not override the need to comply with other applicable laws, such as strata bylaws, lease agreements, and the provincial government's principal residence requirements for short-term rentals. Hosts are responsible for ensuring their STR is fully compliant.

Required Documents for Terrace Short-Term Rentals

To apply for a short-term rental business license in Terrace, you will need to submit the following documents according to the City of Terrace Zoning Bylaw No. 2069-2014:

  1. Completed business license application form: This form collects key information about your short-term rental property and business. You can obtain the application form from the Business Licensing counter at Terrace City Hall or by emailing businesslicensing@terrace.ca.
  2. Proof of ownership or permission from the property owner: You must demonstrate that you either own the property or have explicit permission from the owner to operate a short-term rental. Acceptable proof includes a property title or a signed letter from the owner.
  3. Parking plan: You are required to submit a plan showing the number and location of dedicated off-street parking spaces for your short-term rental guests. This helps ensure your rental will not negatively impact street parking for neighbors.
  4. Floor plan of the short-term rental unit: Provide a detailed floor plan that shows the layout of your rental unit, including bedrooms, bathrooms, entrances/exits, and any other relevant spaces. This is used to verify that your rental meets safety and livability standards.
  5. Proof of sufficient liability insurance: Short-term rental operators must have appropriate insurance coverage for their property. Contact your insurance provider for details on short-term rental insurance and submit proof of coverage with your application.
  6. Fire and safety inspection report: Before your license is approved, your short-term rental unit must pass a fire and safety inspection conducted by the Terrace Fire Department. They will check for working smoke alarms, carbon monoxide detectors, fire extinguishers, and safe emergency exits.

Once you have compiled all the required documents, submit your complete application package to the Business Licensing counter at Terrace City Hall or email it to businesslicensing@terrace.ca. The annual business license fee of $200 will be collected after your application is reviewed and approved.

It's important to note that the City of Terrace has the authority to request additional documentation as needed to verify your eligibility for a short-term rental business license. Incomplete applications will not be processed, so ensure you have included all the required items before submitting.

Terrace Short-Term Rental Taxes

As a short-term rental operator in Terrace, British Columbia, it's important to understand your tax obligations at the federal, provincial, and municipal levels. Here's a breakdown of the key taxes that apply to your rental business:

GST (Goods and Services Tax): If your short-term rental revenue exceeds $30,000 annually, you must register for and collect GST at a rate of 5% on the rental price. This applies to most short-term accommodations, unless they are specifically exempt. As a GST registrant, you can claim input tax credits to recover GST paid on eligible business expenses.

PST (Provincial Sales Tax): Short-term accommodations in British Columbia are subject to the 8% PST, which is calculated on the total purchase price including additional fees like cleaning or service charges. You must register to collect PST if you provide accommodation in B.C., unless you only list your property on an online marketplace that collects PST on your behalf (such as Airbnb).

MRDT (Municipal and Regional District Tax): The MRDT is an up to 3% tax that applies to short-term accommodations in participating areas of B.C., including Terrace. This tax is administered in the same manner as the PST and is used to fund tourism marketing and development. As of 2024, the MRDT rate in Terrace is 2%.

It's important to note that GST applies on top of the PST and MRDT. For example, if your nightly rental rate is $100, the total taxes would be:

  1. PST (8%): $8
  2. MRDT (2%): $2
  3. GST (5% on rental rate + PST + MRDT): $5.50
  4. Total taxes: $15.50

Tax Deductions and Write-Offs

As a short-term rental operator, you can deduct eligible expenses incurred to earn rental income on your tax return. These deductions can help offset your taxable rental income. Some common deductible expenses include:

  1. Advertising costs
  2. Insurance premiums
  3. Interest and bank charges
  4. Professional fees (legal and accounting)
  5. Property management fees
  6. Repairs and maintenance
  7. Property taxes
  8. Utilities
  9. Cleaning fees
  10. Supplies

You may also be able to deduct a portion of your home expenses (mortgage interest, property taxes, utilities, etc.) if you are renting out space in your primary residence. The deductible portion is based on the percentage of your home's square footage used for the rental.

It's recommended to keep detailed records of all your rental income and expenses throughout the year. Consider working with a qualified tax professional to ensure you are meeting your tax obligations and maximizing your deductions as a short-term rental business.

British Columbia Wide Short-Term Rental Rules

In addition to Terrace's local short-term rental regulations, hosts must also comply with new province-wide rules that came into effect on May 1, 2024, under the Short-Term Rental Accommodations Act (STRAA).

The key provincial requirement is the principal residence restriction. In communities with populations over 10,000, including Terrace, short-term rentals are limited to the host's principal residence, plus one additional unit on the same property such as a secondary suite or accessory dwelling. This means investment properties can no longer be used solely for short-term rentals.

The STRAA also removes legal non-conforming use protections for short-term rentals. Previously, some properties were allowed to continue operating as short-term rentals even if they didn't conform with updated local bylaws. This is no longer permitted as of May 1, 2024.

Other notable provincial requirements include:

  1. Short-term rental platforms like Airbnb and VRBO must share data with the provincial government on a monthly basis starting in May 2024.
  2. Platforms must remove listings that don't display a valid business license number, in areas where licenses are required by the local government.
  3. A provincial short-term rental registry is expected to launch by early 2025. Hosts will need to register and include their registration number in all listings.
  4. The province has established a Short-Term Rental Compliance and Enforcement Unit to investigate alleged violations, with the ability to issue fines ranging from $500-$5000 per day for hosts.

The new provincial rules aim to return more short-term rental units to the long-term housing market during the current affordability crisis. The province estimates over 19,000 entire homes in BC are currently being used as short-term rentals for most of the year.

While the tourism industry has expressed concerns about the impact on accommodation options and visitor spending, the province believes the societal benefits of increasing long-term rental supply takes priority. Terrace hosts should carefully review both the local and provincial short-term rental requirements to ensure they are in full compliance.

Does Terrace Strictly Enforce STR Rules?

Based on discussions in online forums like Reddit and BiggerPockets, it appears that Terrace is not particularly Airbnb-friendly compared to some other cities in British Columbia. The city seems to be taking a stricter approach to enforcing its short-term rental regulations.

One Reddit user commented, "Terrace is cracking down hard on illegal Airbnbs. They've hired additional bylaw officers specifically to investigate STRs and issue fines. I know several hosts who have been forced to shut down in the past year."

Another BiggerPockets member shared, "I used to operate a couple of unlicensed Airbnbs in Terrace, but it's just not worth the risk anymore. The city is really ramping up enforcement. I got hit with a $1000 fine last month and decided to convert my units to long-term rentals instead."

While some hosts may still be operating STRs under the radar in Terrace, the general consensus seems to be that it's becoming increasingly difficult to do so without facing penalties. The city appears committed to prioritizing long-term housing over short-term rentals.

"Terrace definitely isn't an Airbnb boomtown like some other places in BC," opined a Reddit user. "Between the strict local regulations and the new provincial rules, I think the STR glory days are over here. The city means business when it comes to compliance."

In summary, Terrace appears to be actively enforcing its short-term rental bylaws and is less tolerant of illegal STRs compared to certain other jurisdictions. Hosts should carefully weigh the risks before attempting to operate without proper licensing and approvals, as the chances of flying under the enforcement radar in Terrace seem to be diminishing.

How to Start a Short-Term Rental Business in Terrace

Starting a short-term rental business in Terrace, British Columbia requires careful planning and compliance with both local and provincial regulations. Here are the key steps to get started:

  • Ensure your property meets the principal residence requirement: As of May 1, 2024, short-term rentals in Terrace are restricted to your principal residence, plus one additional unit on the same property such as a secondary suite or accessory dwelling. Investment properties can no longer be used solely for short-term rentals. Confirm your property is eligible before proceeding.
  • Obtain necessary permits and licenses: Apply for a business license from the City of Terrace. You'll need to provide proof of ownership, a parking plan, floor plan of the rental unit, liability insurance, and pass a fire and safety inspection. The annual license fee is $200. Processing takes 2-3 weeks. Thoroughly review the application checklist and gather all required documents before submitting to avoid delays.
  • Prepare your space for guests: Furnish and equip your rental to create a welcoming space. Invest in quality bedding, towels, kitchenware, and amenities. Consider hiring a professional photographer to showcase your listing. Put yourself in your guests' shoes. Provide items you'd appreciate as a traveler, like local guidebooks, coffee/tea, and toiletries.
  • Create a compelling listing: Sign up on popular short-term rental platforms like Airbnb and VRBO. Craft an enticing title and description highlighting your space's best features and location. Use high-quality photos and include all key info like amenities, house rules, and cancellation policy. Be responsive to inquiries and guest reviews to build your reputation as a top host.
  • Set competitive rates: Research similar listings in Terrace to price your rental competitively. Consider dynamic pricing to maximize occupancy and revenue. Factor in additional costs like cleaning fees and taxes. Use pricing tools to automatically adjust rates based on demand, seasonality, and local events.
  • Understand tax obligations: Register to collect the 8% PST and 2% MRDT on your bookings. If your annual revenue exceeds $30,000, you must also register for GST. Consult a tax professional to ensure compliance and identify eligible deductions. Keep detailed records of all income and expenses to simplify tax filing and maximize write-offs.
  • Establish efficient operations: Create a system for managing bookings, guest communication, cleaning, and maintenance. Consider hiring a co-host or cleaner to assist with day-to-day operations. Automate where possible with tools for self check-in, smart pricing, and message templates to streamline your workflow.
  • Comply with bylaws and regulations: Familiarize yourself with Terrace's short-term rental bylaws, including occupancy limits, parking requirements, and safety standards. Stay informed of any changes to local or provincial regulations. Join local host forums or industry associations to stay current on regulatory developments and connect with other operators.

By following these steps and continuously optimizing your listing and operations, you can successfully launch and grow a compliant short-term rental business in Terrace. Remember, the regulatory landscape is evolving, so adaptability is key to long-term success in this market.

Who to Contact in Terrace about Short-Term Rental Regulations and Zoning?

If you have questions about short-term rental regulations or zoning in Terrace, here are the key contacts and resources:

City of Terrace Development Services Department

This department handles business licensing, zoning, and building permits for short-term rentals.

  1. Phone: 250-615-4000
  2. Email: developmentservices@terrace.ca
  3. Address: 5003 Graham Ave, Terrace, BC V8G 1B3
  4. Website: https://www.terrace.ca/business-development/building-licencing

City of Terrace Bylaw Compliance Department

For questions about short-term rental bylaws and enforcement.

  1. Phone: 250-615-4037
  2. Email: bylaw@terrace.ca
  3. Website: https://www.terrace.ca/city-hall/bylaw-compliance

Terrace Zoning Bylaw No. 2069-2014

Review the city's official zoning bylaw for detailed information on short-term rental regulations.

Link: https://www.terrace.ca/sites/default/files/docs/business-development/terrace_zoning_bylaw_2069_-_2014_consolidated_feb_22_2021.pdf

Terrace Short-Term Rental Hosts Facebook Group

This private Facebook group is a helpful resource for local hosts to share experiences, ask questions, and stay updated on regulations.

Link: https://www.facebook.com/groups/terracestrhosts

AirBnB Terrace Hosts Forum

Connect with fellow Terrace hosts on the Airbnb Community Center to discuss local regulations, hosting tips, and more.

Link: https://community.withairbnb.com/t5/Hosting/Terrace-Hosts-Discussion-Forum/td-p/1293684

British Columbia Short-Term Rental Association (BCSTRA)

BCSTRA is a non-profit industry association representing short-term rental hosts across the province. They provide useful resources and advocacy related to regulations.

  1. Website: https://bcstra.ca/
  2. Email: info@bcstra.ca

By reaching out to these contacts and engaging with the Terrace short-term rental community, you can get the most up-to-date and accurate information to ensure your STR business remains compliant with local and provincial rules.

What Do Airbnb Hosts in Terrace on Reddit and Bigger Pockets Think about Local Regulations?

While there aren't many Terrace-specific discussions about short-term rental regulations on Reddit or BiggerPockets, here are a few relevant threads that provide insight into how hosts in British Columbia are reacting to the new rules:

Reddit - Vancouver, BC AirBnb hosts: In this thread, Vancouver hosts discuss how the new provincial regulations are impacting their businesses. One host commented, "I expect business volumes to really plummet as of January and then, basically, I won't have a business as of May 1." Another mentioned, "With these new regulations coming into effect, I'm going to raise my prices because the supply will be going down soon."

Reddit - Why are people taking these new Airbnb rules seriously: This post questions why hosts are reacting strongly to the provincial rules when Vancouver already had similar restrictions. Commenters note that the province has more enforcement power than the city. "The City of Vancouver doesn't have the teeth (manpower) to enforce airbnb laws, the province does," one user explained.

BiggerPockets - AirBNB Starting Out in Canada: While not specific to Terrace, this thread features a new host in British Columbia looking for advice on starting an Airbnb. Respondents caution the original poster to thoroughly review the new regulations, noting the high fines for non-compliance. "Do you have $2 million to pay for a property, that you must live in," one reply stated, referencing the principal residence requirement.

Reddit - I think I'm done with Airbnb: In this thread, guests and hosts alike share frustrations with how the short-term rental experience has declined in recent years. One former host commented, "I was a hardcore defender of airbnb when it started... However it has become worse and worse. Now if I am looking at a short holiday I will prefer hotels if the price allows it."

While these discussions are not Terrace-specific, they suggest that hosts across British Columbia have concerns about how the new rules will impact their businesses and the short-term rental market overall. The general sentiment seems to be that the regulations will reduce the supply of listings and make it harder for hosts to operate profitably, especially in the province's larger cities. However, some acknowledge the need for stricter oversight to combat the housing crisis.

Disclaimer: While we here at BNBCalc strive to keep all of our city regulation guides updated and accurate with all the latest local laws, we still do not suggest using them as your sole or primary source for local regulations. We also do not recommend you rely on the third-party sources we link to or reference, and we are not responsible for any of the information on these third-party sites. These guides are for entertainment purposes only and only provide basic information and should not be considered as legal advice.

We highly recommend directly contacting the responsible parties for each city and hearing what their officials have to say. Ultimately, it's your responsibility as an investor to ensure you fully comply with the local laws, and it's best to speak with professionals before making an investment decision.

⚡️
Reveal your property’s rental profitability

Buy this property and list it on Airbnb.