Short-Term Rental Rules in Canada 2025: Airbnb Regulations

Short-term rentals (STRs) — properties rented for less than 30 days at a time through platforms like Airbnb and VRBO — are subject to an increasingly complex web of federal, provincial, and municipal rules in Canada. A major federal law came into effect in 2024 restricting STR tax deductions for non-compliant operators. This guide covers what every Canadian STR host needs to know in 2025.

Federal Short-Term Rental Tax Rule (2024+)

Starting January 1, 2024, the federal government introduced a rule that denies income tax deductions for short-term rental expenses if the property is not compliant with provincial and municipal STR regulations. This means:

If your city requires a STR licence and you don't have one, you cannot deduct mortgage interest, property taxes, insurance, or any other expenses against your STR income
The income is still fully taxable — you just lose all deductions
Compliance means having all required licences, permits, and registrations in the jurisdiction where the property is located

This is a major change. Non-compliant STR hosts effectively pay tax on gross revenue with no deductions — a potentially enormous tax bill. Ensure your STR is fully licensed and permitted before claiming any deductions.

GST/HST on Short-Term Rentals

Unlike long-term residential rentals (which are GST/HST exempt), short-term rentals are taxable supplies. If your total STR revenue exceeds $30,000 in any 12-month period, you must:

Register for a GST/HST account with the CRA
Charge and collect GST/HST on all STR revenue
Remit the tax to the CRA quarterly or annually
Claim input tax credits (ITCs) on eligible expenses

Many part-time Airbnb hosts fall below the $30,000 threshold and are not required to register, but should track revenue carefully. Note that Airbnb collects and remits GST/HST on behalf of hosts in most Canadian provinces under a digital services platform agreement with the CRA.

Income Tax on STR Revenue

STR income is reported on your T1 return. Depending on the level of services you provide, it may be classified as:

Rental income (T776) — passive rental, minimal services (most Airbnb hosts)
Business income — if you provide hotel-like services (daily cleaning, meals, concierge)

Business income is subject to CPP contributions on self-employment income; rental income is not. Most casual STR hosts report on T776.

City-by-City STR Regulations in Canada 2025

City	STR Rules	Key Restriction
Toronto	Licence required; principal residence only	Cannot STR a non-primary home
Vancouver	Licence required; principal residence only	Entire-home STR banned in non-primary residences
Calgary	Business licence required	Must notify neighbours; safety inspection
Ottawa	STR permit required; principal residence only	Max 180 days/year for entire home
Montreal	Registration required; classification system	Full units require tourist accommodation classification
Victoria, BC	Business licence + principal residence	STRs banned in secondary properties in many zones

Toronto STR Rules

Toronto requires hosts to register with the city and only allows STRs in a host's principal residence. Investors cannot run STRs in investment condos or houses they don't live in. Hosts must display their registration number in all listings. Fines for non-compliance can reach $100,000.

Vancouver STR Rules

Vancouver has some of Canada's strictest STR rules. Only principal residences are allowed for STR. A Business Licence is required. Secondary suites may be permitted for STR in some cases. Non-compliance can result in fines and platform delisting.

Provincial Rules

Several provinces have added STR regulations layered on top of municipal rules:

BC: Legislation requires all STR operators to have a provincial registration number and comply with local rules. Platforms must verify host compliance.
Quebec: All tourist accommodations require provincial classification. Unregistered STRs can face significant fines.
Ontario: No province-wide STR licensing, but municipalities (Toronto, Ottawa) have their own requirements.

STR Income vs. Long-Term Rental: Tax Comparison

Feature	Short-Term Rental	Long-Term Rental
GST/HST	Taxable supply (charge HST if over $30K)	Exempt supply (no HST)
Income reporting	T776 or business schedule	T776
Expense deductions	Yes (if compliant with local rules)	Yes
Principal residence impact	Yes — same as long-term rental	Yes
Municipal licence required	Usually yes (most major cities)	Generally no

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Conclusion

Short-term rental regulations in Canada have tightened significantly since 2023–2024. The federal denial of deductions for non-compliant operators is a game-changer — ensure your STR is licensed and permitted before claiming any expenses. Report all income, understand your GST/HST obligations, and stay current with your city's rules as they continue to evolve. Consult a tax professional familiar with STR taxation to set up your reporting correctly.