Short-term rental not a 'business,' B.C. owner claims in rejected assessment appeal

Nanaimo, B.C. is pictured. (CTV News)

A B.C. man's unique claim that his short-term rental unit was not a "business," but an "investment" for the purposes of his 2024 property assessment has been rejected.

Kenneth Kung challenged the assessment through the province's Property Assessment Appeal Board, arguing against the split-classification of his Nanaimo condo as part "residential" and part "business or other."

"We are renting out our condo as an investment and not as a business," Kung wrote in his appeal.

The board was not persuaded.

In a Nov. 29 decision, panel chair Kenneth Thornicroft noted that properties are considered "business or other" – Class 6 under B.C.'s classification regulations – if used as a short-term rental for a "substantial portion" of the applicable 12-month period used for an assessment.

In this case, that period was from July 1, 2022 to June 30, 2023.

Kung's two-bedroom condo – located in a 21-unit building near the Nanaimo waterfront – was listed as available to rent for 327 days during that time, and was rented out for 276 days, according to the decision.

"The appellant’s position that he views the rental income as a 'return on investment' rather than 'business' income is wholly irrelevant to whether his unit partially qualifies for Class 6 designation," Thornicroft wrote.

Notably, Nanaimo has required short-term rental operators in the community to obtain a business licence since March 2022.

Much of Kung's appeal was focused on his concerns around his 2024 property taxes, which he called "extremely high" in comparison to previous years.

Thornicroft's decision does not specify how much Kung was charged in taxes, but Nanaimo's 2024 tax rate for Class 6 properties was 19.42 per cent, up 0.53 per cent from 2023.

Kung's property was assessed at $595,307, including $203,900 for the residential portion and $391,497 for the business portion. It also qualified for $2,497 in tourist accommodation strata exemptions, bringing the net total assessment down to $592,900.

In his decision, Thornicroft pointed out the Property Assessment Appeal Board has "no jurisdiction" to address the taxes levied by municipalities.

"Year-to-year changes in municipal taxation rates, or increases in total taxes from one year to the next, are not issues the board has any statutory authority to review," he added.

Recent sales from the same Nanaimo condo building – including a slightly smaller two-bedroom unit that went for $600,000 – also support the assessed value, the panel chair wrote.