Chapter 1

Short-Term Rental Laws in Ontario: Rules, Taxes and FAQs

Last updated: July 2025

Ontario is where Canada comes to life—through its world-class sports, vibrant arts scene, and stunning natural landscapes. It’s where luxury meets adventure, offering everything from wine tasting along Lake Ontario to star-studded premieres at the Toronto International Film Festival, and tranquil escapes in Algonquin Park or Georgian Bay.

With this unique blend of urban energy and outdoor charm, it’s no surprise that Ontario is a prime destination for short-term rentals.

That’s why we constantly hear from hosts and property managers with questions about short-term rental laws in Ontario. In this guide, we’re breaking down everything you need to know about Ontario Airbnb rules—from local regulations and tax obligations to the most common concerns we’ve encountered firsthand.

Don’t see the form to download our Short-Term Rental Agreement? Click here.

Yes, short-term rentals are entirely legal in Ontario! However, the specific rules governing their operation will depend on the location of the property. In Ontario, municipalities control the regulation of Airbnb, and the rules vary from one city to the next.

By design, the regulations are intended to maintain community standards and ensure a sufficient supply of rental properties for long-term tenants that call the city home. However, some municipalities are more strict than others, so knowing the exact regulations you need to follow is important to stay compliant and fine-free.

What’s considered a short-term rental in Ontario?

Unlike other jurisdictions in Canada, the Government of Ontario has taken a hands-off approach to Airbnb management, leaving it largely up to individual municipalities to define what constitutes a short-term rental. (These powers to create rules for Airbnb in Ontario come from the City of Toronto Act and Municipal Act.) As such, you should be sure to check your local government’s definition, as what constitutes an STR in one city may not be the same in another.

For instance, the City of Ottawa defines a short-term rental as an entire or part of a residential unit rented for a period of fewer than 30 consecutive nights that is marketed or brokered by a short-term rental platform and is not a rooming house or hotel. STRs in Ottawa can include BnBs and cottage rentals.

On the other hand, in Toronto, a short-term rental is considered a dwelling unit (either whole or partial) rented for fewer than 28 consecutive days in exchange for payment. Short-term rentals include bed and breakfasts but exclude hotels, motels, and most student residences.

General Airbnb rules in Ontario

As we mentioned above, there are no set Airbnb rules in Ontario enforced by the province. However, if your short-term rental is located in a popular city,  it’s likely that you’ll need to meet the following municipal requirements:

  • Obtain a licence from the city to operate the Airbnb and pay any necessary fees
  • Collect the appropriate taxes, such as Harmonized Sales Tax and Municipal Accommodation Tax (MAT)
  • Have valid insurance that includes a rental clause
  • Be at least 18 years old with a government photo ID

Ontario Airbnb rules by city

Because short-term rental regulations in Ontario are handled at the municipal level, it’s essential to look at the rules city by city. The provincial government has given each municipality the authority to set and enforce its own laws, which means the rules can vary significantly depending on where your property is located.

While this guide covers several key areas, it’s not a comprehensive list. We always recommend checking with your local municipality for the most up-to-date Airbnb regulations, as policies can change frequently.

Toronto

Toronto has some of the most detailed and strictly enforced Airbnb regulations in Ontario—unsurprising given the city’s booming short-term rental market. If you’re planning to operate a vacation rental in Toronto, here’s what you need to know:

  • You must register with the City of Toronto and obtain a valid short-term rental licence.
  • You must comply with all city-specific regulations governing short-term rentals.
  • Only your principal residence can be rented—this includes the entire home or individual rooms within it.
    • If renting the entire home, you’re limited to a maximum of 180 nights per year.
    • If renting individual rooms within your home, there’s no annual cap, but you may host a maximum of three rooms at a time.
  • Secondary homes or investment properties are not eligible for short-term rental licensing.
  • You are required to collect and remit the 8.5% Municipal Accommodation Tax (MAT) in addition to HST.

Learn more about Airbnb rules in Toronto.

Niagara Falls Airbnb rules

Known for its world-class wineries and proximity to the iconic Niagara Falls, this region has introduced specific Airbnb regulations to help ensure a smooth experience for both guests and hosts. If you’re looking to operate a short-term rental in Niagara Falls, here are the key requirements to keep in mind:

  • You must obtain a short-term rental licence and adhere to all regulations set by the City of Niagara Falls.
  • Your property must be located within a Tourist, General, or Commercially designated zone as defined by the city’s zoning bylaws.
  • You may rent out a maximum of three bedrooms per property.
  • You’re required to collect and remit a nightly fee as part of the Municipal Accommodation Tax (MAT), in addition to HST. Rate amounts are based on the star rating of the accommodation:
    • Five-star rating: $7
    • Four-star rating: $6
    • Three-star rating: $5
    • Two-star rating: $4
    • Unrated properties: $5

Ottawa Airbnb rules

As a popular destination for both government travel and tourism, Ottawa has long been a hub for short-term rentals. To manage the growing demand, the City of Ottawa has established its own Airbnb regulations designed to bring clarity and structure to the industry. If you’re planning to operate a short-term rental in the nation’s capital, here’s what you need to know:

  • You must apply for a short-term rental licence and pay the required registration fee.
  • The property must be your principal residence.
    • If you’re a tenant, written permission from your landlord is required.
    • If the property is in a rural area, you may be eligible for a separate cottage rental permit.
  • You must collect and remit a 5% Municipal Accommodation Tax (MAT), plus HST, on the total booking amount—including cleaning fees.
  • Occupancy is limited to 10 guests per property, with no more than two guests per bedroom.

Huntsville Airbnb rules

Huntsville, a favorite in Ontario’s beloved cottage country, has welcomed short-term rentals—but not without structure. To help preserve the peace and character of the area, the town has introduced specific rules under its Short-Term Rental Accommodation (STRA) Program. If you plan to host in Huntsville, here’s what you’ll need to do:

  • You must participate in the STAP program by obtaining a licence and paying an annual licensing fee. Only properties in designated zones are eligible.
  • Your property must meet key documentation requirements, including a Certificate of Insurance, a waste disposal plan, and detailed site drawings.
  • You are required to collect and remit a 4% Municipal Accommodation Tax (MAT), plus HST.
  • Occupancy is limited to two guests per bedroom.

Mississauga Airbnb rules

As demand for short-term rentals continues to grow in Mississauga, the city has implemented its own set of regulations to help maintain balance in this rapidly evolving market. If you’re planning to operate a short-term rental here, be prepared to follow these key requirements:

  • You must apply for and be approved for a short-term accommodation licence for your principal residence, and pay the associated licensing fee.
  • Your application must include the following documentation:
    • Government-issued photo ID
    • Proof of liability insurance with a minimum coverage of $2 million
    • Evidence confirming the address is your primary residence
  • Additional permissions may be required depending on your property type:
    • If you live in a condo or apartment, you’ll need written approval from your condo board.
    • If you’re renting the property, you must obtain permission from the homeowner.

Waterloo

Waterloo is among the latest Ontario regions to roll out short-term rental regulations, with enforcement beginning in May 2025. While the city’s licensing system is more detailed than in some other areas, Waterloo offers support to help residents navigate the process. If you’re planning to operate a short-term rental, you’ll likely need to apply for a Class “B” licence, which applies to owner-occupied properties used for short-term accommodations.

Here’s what the Class “B” licence entails:

  • Allows for short-term rentals in owner-occupied units
  • Rentals are limited to 275 days per year, with a maximum of 30 consecutive days per stay
  • Up to four bedrooms can be rented in a single listing

 

To complete your application, you’ll also need to provide the following documentation:

  • Electrical system inspection form
  • Gas or heating appliance inspection forms
  • Insurance declaration
  • Owner authorization form (if applicable)
  • Floor plan and parking layout
  • Proof of ownership or corporate ownership details
  • Police criminal record check

Ontario Airbnb taxes

When it comes to taxes on short-term rentals in Ontario, there are two separate tax schemes every host and property manager should understand: the Harmonized Sales Tax (HST), implemented by the provincial and federal governments, and the Municipal Accommodation Tax (MAT), implemented by Ontario municipalities.

Here’s what you need to know about each.

1. Harmonized Sales Tax (HST) – Federal and Provincial

The HST in Ontario is 13% and applies to short-term rental accommodations of less than 30 days. This includes both the nightly rental rate and any mandatory fees, such as cleaning charges.

Here’s how HST works depending on your registration status with the Canada Revenue Agency (CRA):

  • If you’re not registered for HST: Airbnb and other major booking platforms typically collect and remit HST on your behalf, meaning you don’t need to worry about handling it directly.
  • If you’re registered for HST (i.e., you have a GST/HST number): You’ll need to provide your tax number to the platform (like Airbnb), and you’ll be responsible for collecting and remitting HST yourself to the CRA, along with filing regular returns.

Tip: You’re generally required to register for HST if your total taxable revenues exceed $30,000 over four consecutive calendar quarters.

Note: There’s also a “change-in-use” rule—if you mostly use a property for short-term rentals (e.g., via Airbnb), selling it may trigger an HST charge even if you’re not registered.

2. Municipal Accommodation Tax (MAT)

In addition to HST, many Ontario municipalities charge a Municipal Accommodation Tax (MAT) on short-term rentals. The rate and rules vary by city, so it’s essential to check with your local municipality.

For example:

  • In Toronto, MAT is 8.5% and applies to the cost of the stay (excluding HST).
  • Hosts must collect and remit the MAT themselves, even if they use platforms like Airbnb.
  • Hosts must also file quarterly MAT reports with the City of Toronto.

Other cities like Niagara Falls, Ottawa, Mississauga, and Huntsville also have MAT in place, typically ranging from 4% to 6% or including a flat nightly fee, and each has its own procedures for registration, collection, and reporting.

FAQs about Airbnb rules in Ontario

Is Airbnb allowed in Ontario?

Yes, Airbnb and other short-term rental sites, such as Vrbo, are legal in Ontario. As short-term rentals are regulated at the municipal level, you will need to check the specific rules and regulations of the city you reside in.

Does Airbnb report your income to the CRA?

No, Airbnb does not report your rental income to the Canada Revenue Agency (CRA). The exception to this is if the CRA were to contact Airbnb with a court order, in which case they would have to comply.

However, Airbnb may collect and remit Harmonised Sales Tax (HST) on your behalf, depending on your registration status. Here’s how it works:

  • If you’re not registered for HST: Airbnb and other major booking platforms typically collect and remit HST on your behalf, meaning you don’t need to worry about handling it directly.
  • If you’re registered for HST (i.e., you have a GST/HST number): You’ll need to provide your tax number to the platform (like Airbnb), and in most cases, you’ll be responsible for collecting and remitting HST yourself to the CRA, along with filing regular returns.

Do you need a licence for Airbnb in Ontario?

Whether or not you need a short-term rental licence in Ontario depends on your local municipality. The province allows cities and towns to set their own rules, and in many cases, a licence is required to legally operate an Airbnb or similar vacation rental.

If you’re located in a community that has introduced specific regulations for short-term rentals, you will very likely need to apply for a licence and meet additional local requirements. For example, licensing is currently mandatory in:

  • Toronto
  • Ottawa
  • Mississauga
    Waterloo
  • Huntsville
  • Niagara Falls

Each city has its own licensing process, fees, and documentation requirements, so it’s important to consult your municipality’s official website or contact their short-term rental office for the most accurate and up-to-date information.

Tip: Even if your community doesn’t currently require a licence, that may change—so keeping tabs on local Ontario Airbnb laws is essential.

Does Airbnb collect your MAT?

No—Airbnb does not collect or remit the Municipal Accommodation Tax (MAT) on your behalf. If you’re operating in a municipality that requires MAT, you are responsible for adding it to your nightly rate and remitting it directly to the local government according to their reporting schedule.

You’ll need to configure your Airbnb account settings so the MAT is included in the total cost charged to guests. It’s also your responsibility to register with your local municipality, collect the correct MAT rate, and submit regular filings (such as quarterly reports in cities like Toronto).

Note: While Airbnb does not handle MAT, it does collect and remit HST on your behalf if you’re not registered with the Canada Revenue Agency (CRA). If you are registered and have a GST/HST number, you’ll need to handle HST collection and remittance yourself.

Who enforces Airbnb legislation in Ontario?

Enforcement of Ontario Airbnb regulations is primarily the responsibility of municipal by-law officers. These local officials ensure compliance with city-specific rules regarding licensing, safety, and zoning. In some rare cases, local police may get involved, especially if violations escalate or involve other legal issues beyond by-law infractions.

Each municipality sets its own fines and enforcement procedures, but the maximum penalties are governed by provincial legislation such as the City of Toronto Act and the Municipal Act. These laws empower cities to impose fines and penalties to ensure compliance with their Ontario short-term rental laws.

Manage your Ontario vacation rental with Lodgify!

Navigating Ontario’s short-term rental regulations is essential for running a successful Airbnb or vacation rental business. From understanding municipal licensing and safety standards to managing tax obligations, staying informed about local Ontario short-term rental rules helps you stay compliant and competitive. Responsible hosting not only protects your investment—it also contributes to Ontario’s vibrant and thriving short-term rental community.

Looking for support managing your Ontario Airbnb? Lodgify is here to help. Start your free 7-day trial today and see how simple it can be to build a direct booking website, sync all your listings, and automate your daily operations.

Don’t see the form to download our Short-Term Rental Agreement? Click here.