Airbnb Rules in Ontario: Laws, Regulations and Taxes

Ontario’s short-term rental rules vary widely across the province and many municipalities have adopted their own rules and strict requirements that limit operations to a host’s primary residence with mandatory licensing, registration numbers and detailed compliance standards as of 2025. Cities such as Toronto, Ottawa, Mississauga, Hamilton and Huntsville restrict commercial activity, prohibit most non-owner-occupied short-term rentals and impose clear documentation and tax obligations on all operators of temporary accommodation.

This guide outlines the full legal framework for running a compliant short-term rental in Ontario, covering every requirement from initial registration to ongoing operational standards.

What this guide covers

This comprehensive resource details Ontario’s short-term rental regulations, primary residence verification, licensing and short-term rental registration requirements, municipal accommodation tax (MAT) obligations, safety compliance standards, enforcement mechanisms and step-by-step application processes across major municipalities.

This guide excludes general hosting tips, marketing strategies or property management advice unrelated to legal compliance.

Who this is for

This guide is designed for current and prospective Ontario short-term rental hosts, property owners evaluating vacation rentals or investment properties and property managers operating across different Ontario municipalities. Whether you’re launching your first short-term rental business or ensuring continued compliance, you’ll find practical regulatory guidance and clear operational requirements.

Why this matters

Ontario municipalities have significantly increased enforcement, issuing steep fines, suspending licenses and removing listings that violate short-term rental laws, fail to meet primary residence criteria or operate without required registration. Cities like Toronto and Ottawa conduct audits, use platform data to identify violations and impose penalties that can reach tens of thousands of dollars per day. With expanding compliance monitoring and shared reporting across booking platforms, non-compliance is quickly detected.

What you’ll learn:

• Ontario’s primary residence and principal residence requirements

• Complete licensing and short-term rental registration processes

• HST and municipal accommodation tax (MAT) obligations and what hosts must collect and remit

• Mandatory safety standards and Ontario Fire Code expectations

• Enforcement actions, penaltiesand how Ontario municipalities regulate and limit short-term rentals

Understanding Ontario’s Short-Term Rental Legal Framework

Ontario regulates short-term rentals at the municipal level and each city defines the rules for short-term rental accommodation, licensing, taxes and where these rentals are permitted. Most municipalities classify a short-term rental as a residential property rented for fewer than 28 to 30 consecutive days, depending on local bylaws and many limit this activity to a host’s principal residence to prevent commercial conversion of housing stock.

The provincial and municipal framework aims to balance tourism demand with housing availability. Local governments use licensing systems, registration numbers and taxation rules to manage neighborhood impact, ensure fire safety compliance and maintain oversight of commercial activity occurring within residential areas. These measures were introduced to address concerns around rising housing costs, investor-driven conversions and the rapid growth of the short-term rental market in Ontario’s largest cities.

Primary residence requirement

Ontario’s major municipalities define a primary or principal residence as the place a host ordinarily lives, files taxes from and returns to regularly. In cities like Toronto, Ottawa, Mississauga, Hamilton and Huntsville, only this principal residence can be used for short-term rental accommodation and hosts must provide documentation proving residency.

Acceptable documents may include government-issued ID, utility bills, property tax statements or lease agreements explicitly allowing short-term rentals. This requirement effectively restricts secondary property rentals and limits the ability of investment properties to operate as short-term rentals unless they qualify as bed and breakfasts or fall under hotel-type zoning.

This rule forms the core of Ontario’s regulatory framework because it separates legal, owner-occupied listings from prohibited or restricted non-owner-occupied rentals.

Business license vs. short-term rental license

Many Ontario municipalities require both a general business license and a specific short-term rental licence or registration number. The short-term rental licence authorizes the property for temporary accommodation use, while the business license covers broader commercial and tax obligations under local bylaws.

Both licenses typically require the same proof of principal residence, creating a dual verification system that helps municipalities confirm eligibility and prevent unauthorized commercial short-term rental activity.

With these foundational rules in place, the next step is understanding the licensing requirements and the documentation you’ll need before operating a short-term rental in Ontario.

Licensing Requirements and Application Process

Ontario’s short-term rental licensing framework varies by municipality, but most cities require hosts to complete a formal registration process before offering any temporary accommodation. Licensing systems are designed to verify principal residence status, ensure compliance with fire and building standards and establish clear taxation and reporting obligations for all short-term rental operators.

Required documentation

Short-term rental applications typically require proof that the property is the host’s primary residence, along with documentation showing property ownership or authorized use.

Common documentation includes:

• Government-issued identification with the property address

• Two or more secondary documents such as utility bills, voter registration, property tax bills or insurance statements

• Ownership documents or a lease agreement that explicitly permits short-term rental accommodation

• A floor plan, site sketch or building layout, depending on the municipality

• Fire safety documents, including smoke and carbon monoxide detector verification

• A waste management or waste disposal plan where required

• A declaration that the property meets the Ontario Fire Code and local housing standards

Most municipalities also require hosts to display their city-issued registration number on all listings once the application is approved.

Application fees and timeline

Fees vary across Ontario, but most municipalities charge between $50 and $120 for licensing or registration. Toronto, for example, charges $53 for registration, while Ottawa’s licensing fee hovers near the $100–$110 range.

Processing times range from one to six weeks, depending on the volume of applications and whether all required documentation is provided in the correct format. Incomplete submissions often delay approval significantly, as municipalities do not typically accept partial applications.

Lodging tax and MAT registration

Some cities require separate registration for the municipal accommodation tax (MAT) when hosts are responsible for remittance. Even when platforms help collect and remit MAT, hosts may still need to register for compliance or reporting depending on the city’s local rules.

City-by-city licensing snapshot

Below is a simplified overview of licensing expectations across key Ontario municipalities.

Understanding each city’s licensing process sets the foundation for meeting Ontario’s ongoing operational and safety requirements.

Operational Rules and Compliance Standards

Once licensed, Ontario short-term rental hosts must follow ongoing operational rules set by their municipality. These standards focus on safety, occupancy limits, accurate advertising and compliance with local bylaws throughout each rental period. Municipalities actively monitor listings and rely on guest complaints, platform data and neighborhood reporting to ensure hosts follow the rules.

Step-by-step: Safety equipment installation

When to use this: Before listing your property and during annual licence renewal or inspections if your municipality requires them.

• Install smoke alarms: Place functioning smoke detectors on every floor and near all sleeping areas. Test monthly and follow manufacturer guidance for battery replacement.

• Install carbon monoxide detectors: Required in dwellings with fuel-burning appliances or attached garages. Position units outside bedrooms and in accordance with the Ontario Fire Code.

• Provide a fire extinguisher: Store at least one accessible extinguisher in the kitchen, ensuring it is maintained and clearly visible to guests.

• Maintain clear exit routes: Ensure all exit pathways, doors and hallways comply with building code requirements and remain unobstructed.

• Display emergency information: Provide guests with emergency contacts, evacuation instructions and the property’s civic address.

• Visible address numbers: Ensure street-facing address numbers are unobstructed for emergency services.

These measures form the baseline for fire and life-safety compliance in Ontario and municipalities may impose additional requirements during licensing or renewal.

Occupancy limits and rental periods

Municipalities typically set occupancy limits based on the number of bedrooms, building code capacity and the type of residential unit. Some jurisdictions permit short-term rentals in up to three bedrooms, while others impose maximum guest counts regardless of property size.

Municipalities also define rental periods, usually limiting short-term rentals to stays of fewer than 28 to 30 consecutive days. Entire-unit rentals may face additional scrutiny, especially in multi-unit buildings, secondary suites or basement apartments.

Advertising and listing requirements

Ontario hosts must ensure all advertising on short-term rental platforms meets municipal accuracy standards and includes mandatory disclosure elements:

• Display the city-issued registration number on all listings

• Accurately represent the rental unit with clear photos and truthful descriptions

• Disclose any accessibility limitations

• Follow condominium or building rules when applicable

Many municipalities also require operators to keep an online report or record of bookings for inspection upon request.

Municipalities expect professional-level accuracy, treating misleading listings as violations of local bylaws.

Operational compliance is only one part of the legal framework. Hosts must also meet tax and financial obligations tied to rental income and municipal taxation systems.

Tax Obligations and Financial Requirements

Ontario short-term rental operators have several layers of tax responsibilities, including federal HST, local MAT charges and annual income reporting. Even when short-term rental platforms help collect and remit taxes, hosts remain responsible for ensuring everything is reported accurately.

Federal and provincial tax requirements

Short-term rentals are subject to the Harmonized Sales Tax (HST) on the full booking cost, including cleaning fees. Airbnb and other short-term rental companies automatically collect HST on eligible bookings and remit it to the Canada Revenue Agency, but hosts must still track this income for their annual filings.

This includes:

• Reporting rental income as either business income or property income

• Keeping detailed records of each rental period

• Understanding how shared-space rentals (like renting a room in your primary residence) affect deductions

Income tax and eligible deductions

The Canada Revenue Agency allows hosts to claim certain income tax deductions when calculating taxable income from short-term rentals. Deductions vary based on whether the property is your principal residence or an investment property.

Common deductible expenses may include:

• Utilities

• Maintenance costs

• Cleaning and supplies

• Internet and cable

• A proportional share of mortgage interest

• Property taxes

• Insurance costs

• Depreciation for certain assets

Hosts must keep all receipts, booking records and transaction histories in case the CRA requests documentation.

Municipal Accommodation Tax (MAT)

Many Ontario cities charge a municipal accommodation tax (MAT) on rentals under 30 days. Rates usually range from 4 to 6 percent, depending on the municipality.

Key points:

• Some municipalities require hosts to register separately for MAT

• Airbnb may collect MAT automatically, but this varies by city

• Hosts may be responsible for filing periodic MAT returns

• Failure to comply may result in fines or additional audits

Insurance requirements

Because short-term rentals are treated as commercial activity, municipalities often expect hosts to carry appropriate insurance, such as:

• Liability insurance specifically covering short-term rental activities

• Additional coverage for vacation rentals, secondary suites or entire home rentals

Some cities require proof of insurance during registration or renewal.

Understanding these requirements helps hosts avoid financial penalties, maintain accurate reporting and stay compliant with both municipal rules and federal tax law.

Common Challenges and Solutions

Running a compliant short-term rental in Ontario requires hosts to keep track of residency documentation, taxes, platform settings and neighborhood expectations. Most enforcement actions begin with avoidable issues, mismatched paperwork, unclear tax records or complaints that prompt municipal investigations. Here’s how to navigate the most common trouble spots.

Challenge 1: Primary residence documentation mismatches

Solution: Provide a clear, written explanation for any address discrepancies and upload multiple supporting documents.

Municipalities rely heavily on principal residence verification. Issues often arise when a host recently moved, changed utility providers or uses a different mailing address for certain accounts. Submitting extra documentation, such as property tax bills, updated driver’s licences or utility statements, helps prevent delays and avoids rejected applications.

Challenge 2: Confusion around tax collection responsibilities

Solution: Check how your municipality handles municipal accommodation tax (MAT) and confirm whether your platform collects it automatically.

Some Ontario cities rely on Airbnb to collect and remit MAT. Others require hosts to register separately and file monthly or quarterly returns. Hosts are still responsible for keeping backup documentation even when the platform collects taxes in case the city or the Canada Revenue Agency requests an audit. Clear records of rental income, HST, MAT and eligible deductions help prevent compliance issues.

Challenge 3: Neighbor complaints and building restrictions

Solution: Set clear house rules, monitor noise levels and maintain open communication with neighbors and building managers.

Complaints about parking, noise or garbage disposal often trigger municipal investigations. Some cities also require adherence to condominium bylaws or landlord permissions and violations in those buildings can lead to license suspensions. Creating a simple communication protocol for guests and posting essential rules in the unit can help prevent conflict-driven inspections.

Challenge 4: Platform listing errors and missing registration numbers

Solution: Double-check listing pages regularly to ensure the city-issued registration number is displayed correctly.

Many municipalities use platform-scraping tools to identify unregistered or improperly displayed short-term rental licence numbers. Listings missing a registration number are often fast-tracked for enforcement notices or fines. Keeping listing details accurate, including number of bedrooms, occupancy and unit type, minimizes the risk of accidental violations.

Understanding these common challenges helps Ontario hosts avoid the issues that most frequently lead to enforcement actions and keeps your short-term rental business running smoothly.

Penalties and Enforcement Actions

Ontario municipalities use structured enforcement systems to identify unlicensed short-term rentals, verify primary residence claims and respond to operational violations. Enforcement teams rely on platform data, neighbor complaints, periodic audits and monitoring tools that scan listings across multiple short-term rental platforms.

Common violations and fines

Municipalities issue significant penalties for operating without the required licence or registration number, misrepresenting a principal residence or failing to comply with local bylaws. Fines vary by city, but the consequences can be severe:

• Operating without a licence or registration

• Advertising a unit without a visible city-issued registration number

• Violating primary residence or zoning rules

• Failing to collect and remit required MAT payments

• Exceeding occupancy limits or ignoring safety standards

Some municipalities, including Toronto, have penalties that can reach up to $100,000 per day for serious violations. Others issue escalating daily fines until the host comes into compliance.

Investigation and monitoring

Municipalities use a combination of enforcement tools to identify violations:

• Automated monitoring systems that flag unregistered listings

• Cross-referencing addresses with licensing databases

• Reviewing host data shared by short-term rental platforms

• Conducting spot inspections or audits

• Responding to neighbor complaints or building management reports

Enforcement actions often begin with a notice of violation, followed by a compliance order and then monetary penalties if the host does not correct the issue.

License suspension or revocation

A municipality may suspend or permanently revoke a short-term rental licence when hosts:

• Provide false or misleading documentation

• Fail repeated inspections

• Ignore MAT remittance requirements

• Accumulate multiple bylaw violations

• Operate prohibited secondary properties or non-owner-occupied rentals

Revocation typically includes a formal review process, but reinstatement is rare unless the host can demonstrate full compliance, corrected documentation and adherence to all local rules.

Once a licence is revoked, hosts are usually barred from operating future short-term rentals at that address, regardless of ownership changes or updated zoning.

Ontario’s strict penalties highlight the importance of staying aligned with municipal bylaws, tax requirements and short-term rental regulations from the moment you apply through every rental period.

Conclusion and Next Steps

Ontario’s short-term rental regulations create a detailed but manageable framework for hosts who operate from their primary residence and follow municipal licensing rules. While each city sets its own standards, the path to compliance is clear once you understand how registration, documentation, MAT, safety rules and tax obligations fit together. The consequences for disregarding these requirements are substantial, but running a legal short-term rental business in Ontario is entirely achievable with the right preparation.

To get started:

• Verify that your property qualifies as your principal residence under your municipality’s rules

• Gather required documentation, including government-issued ID, proof of residence, ownership or lease records and any fire safety documents

• Review your municipality’s short-term rental registration or licensing process and submit all required materials at once

• Confirm how HST and municipal accommodation tax MAT are collected and remitted for your area

• Ensure your property meets Ontario Fire Code standards and local safety expectations before hosting guests

Ontario’s municipalities each approach short-term rental laws differently, so hosts planning to operate in multiple regions or considering additional vacation rentals should review requirements and seek legal advice from a local lawyer carefully before listing.

FAQ

Can Ontario hosts offer both long-term and short-term rentals in the same property?

Yes, but only if the long-term arrangement doesn’t interfere with your ability to maintain the address as your principal residence. Some municipalities require additional documentation if you mix rental types.

Are there zoning bylaws that affect where short-term rentals can operate in Ontario?

Yes. Many municipalities restrict short-term rentals in certain residential zones or prohibit them in purpose-built rental buildings. Hosts should check their zoning category before applying for a licence.

Can a landlord prohibit a tenant from running a short-term rental in Ontario?

Yes. A landlord or condo board can restrict or fully prohibit short-term rentals even if the municipality allows them. These rules override municipal permissions.

Do guests staying in Ontario short-term rentals have rights under the Residential Tenancies Act (RTA)?

No. Guests in stays shorter than 28–30 days are not covered by the RTA. Their rights depend on municipal bylaws and the booking platform’s policies.

Can hosts run more than one short-term rental if they own multiple properties?

Usually no, but exceptions exist when additional properties operate as licensed commercial accommodations (such as bed and breakfasts or cottage resorts). This varies widely by municipality.

Is it possible to transfer a short-term rental licence to a new owner when selling a property?

Typically no. Most municipalities require the new owner to reapply and prove principal residence status before operating the rental.

Are there quiet-hours rules for short-term rentals in Ontario?

Yes. Noise bylaws apply to all properties and many cities have stricter quiet-hour windows for short-term rentals than for regular residential homes. Violations can lead to fines or a licence review.

Do hosts need to provide accessible features for guests with disabilities?

There’s no requirement to modify your home, but you must accurately disclose accessibility limitations. Misrepresentation can lead to penalties under local bylaws or consumer protection rules.

Can Ontario hosts charge guests additional local fees beyond MAT and HST?

They can, but the fees must be clearly disclosed before booking and must comply with platform rules. Hidden or surprise fees can trigger complaints or municipal scrutiny.