My Airbnb is in Toronto, Canada and I've been researching an issue where when the property is converted from short-term stay (<30d) to long-term stays (>30d), it might cause the owner to pay 13% of the fair market value when the conversion happens. My understanding is that when a property is converted from short-term to long-term, it effectively results in a change of use where the property's use changes from commercial (short-term) to residential (long-term), it's almost as if the property had been torn down and rebuilt. Therefore, HST is applied to the market value even though the property wasn't sold.
If my interpretation of the tax rule is correct, then doesn't it mean a host in Toronto/Ontario should only stick to short-term or long-term bookings? Instead of giving a guest the ability to book a few days or a few months?
I am curious if what I am saying makes any sense at all and if any Toronto/Ontario-based hosts have faced this problem.