Is Airbnb Legal in Canada? Canada Airbnb Laws to Know

If you’re considering renting your vacation home on Airbnb in Canada, the rules aren't the same everywhere. While Airbnb is legal across Canada, each city has its own rules you need to follow.

Most places only let you rent out your primary home. Many cities require you to get a special permit. And yes, you have to report that extra cash on your taxes. Breaking these rules can cost you big money in fines.

Let's break down what you need to know before listing your place.

Quick Tips: What Every Canadian Airbnb Host Should Know

• Airbnb is legal in Canada, but each city has different rules
• Many cities only let you rent out your main home, not investment properties
• You'll probably need a business license or permit from your city
• You must report your Airbnb income on your taxes
• Regular home insurance won't cover Airbnb guests—you need special coverage
• Cities can ask Airbnb to remove your listing if you break local rules

It’s worth noting that this goes for all short-term rentals, not just Airbnb. Airbnb alternatives face the same legal restrictions.

Different Rules in Different Provinces

The rules for renting your place on Airbnb change depending on where you live in Canada. This may affect your decision on which city to invest in.

Ontario

• Toronto: Can list only your main home. You're limited to 180 nights yearly for entire-home rentals and must pay a $53 annual registration fee.
• Ottawa: Requires registration and charges a 4% municipal tax. Only primary residences are allowed.
• Niagara Region: Rules vary by town. Some completely ban short-term rentals in residential areas.

British Columbia

• Province-wide (starting May 1, 2024): Only your main home plus one secondary suite (ex. a basement suite) is allowed in cities over 10,000 people. A business license must be displayed on listings. Airbnb must share data with local governments.
• Vancouver: Registration and business license required. Principal residence rules are strictly enforced.
• Kelowna: Registration and business license required. You can rent out your primary residence plus a secondary suite/carriage house on the same lot. There’s a rental limit of 3 bedrooms (5 if there’s a secondary suite/carriage house, and no more than two adults per bedroom). Check the city website for additional restrictions.

Alberta

• Calgary: Requires business license, fire inspection, and proof of insurance. No main residence requirement yet.
• Edmonton: Business license needed with fire safety codes. Generally less strict than B.C. or Ontario.

Quebec

• Province-wide: All hosts must register with the Corporation de L’industrie Touristique du Québec (CITQ) and display their registration number on all listings.
• Montreal: Has strict zoning laws on top of provincial permits.
• Fines for illegal rentals in Quebec can exceed $50,000—the highest in Canada.

Getting the Right License for Your Airbnb

After checking your local rules, you'll probably need to get a special license or permit.

Most cities require a business license to run an Airbnb. The cost and process differ depending on where you live. In Toronto, you have to register and pay a non-refundable fee.

Many places only allow you to rent out your main home, not properties you buy just for Airbnb. If you’re deciding whether to sell or rent your house, you might have to look at the long-term rental market instead.

In Quebec, the CITQ registration is mandatory and much stricter than in other provinces. You must apply through its tourism corporation, pay fees based on your rental type, and undergo potential property inspections. Without this registration number displayed on all listings, you face the highest fines in Canada.

Getting these licenses isn't just about following rules. It protects you from potential problems with neighbours, insurance, and taxes.

Where You Can (and Can't) Have an Airbnb

Zoning laws matter a lot when running an Airbnb in Canada.

These zoning rules decide where short-term rentals are allowed. They vary widely from city to city and can seriously limit your hosting plans. Some cities have high short-term rental demand, but have restrictions on what kind of rentals are permitted.

The most common zoning limits are designed to keep short-term rentals out of residential neighbourhoods and neighbourhoods experiencing housing shortages.

Ignoring these rules means operating illegally, which can lead to fines of thousands of dollars. 

Taxes You Need to Pay as an Airbnb Host

Running an Airbnb means dealing with taxes. There's no way around it.

All money you make from your Airbnb must be reported as income to the Canada Revenue Agency on your tax return. Get familiar with the T776 Form. Depending on where you live and how much you earn, you may need to collect and send in GST and provincial sales taxes, too.

Starting January 1, 2024, new federal tax rules target non-compliant properties. According to the 2023 Fall Economic Statement, you can't deduct expenses for short-term rentals if you're not following local rules or don't have proper permits. This applies to properties listed on Airbnb, VRBO, or similar platforms.

Some cities also charge a local accommodation fee, which you must collect from guests and pass on to the city.

Not paying these taxes can lead to serious penalties, so keep careful records of all your income and expenses. The CRA has increased audits of short-term rental hosts, and penalties can include back taxes plus interest.

Getting the Right Insurance for Your Airbnb

Don't assume your regular home insurance covers Airbnb guests. It probably doesn't.

Standard homeowner insurance typically won't cover short-term rentals. You need specific liability coverage to protect yourself if a guest gets hurt or damages your property.

Talk directly with an insurance agent about your hosting plans. Make sure your policy meets local rules and covers all possible problems.

While Airbnb offers some basic protection through its Host Guarantee, it's not a replacement for real insurance.

Operating without proper coverage puts your finances at serious risk. A single claim could cost you thousands or even hundreds of thousands of dollars if you're not properly insured.

How to Stay Legal and Keep Your Airbnb Running Smoothly

Following the rules makes your Airbnb experience better for everyone.

First, get to know your local laws. Check city websites for short-term rental rules. Get all required permits and licenses before listing your place.

Keep up with your taxes by reporting all Airbnb income to the CRA and paying any local accommodation taxes.

Make sure your listing is honest and includes any required registration numbers.

Safety is non-negotiable. Install smoke detectors, provide emergency contact info, and regularly check that everything in your place works properly.

Be aware that enforcement is getting stricter. Cities can now request that Airbnb remove non-compliant listings entirely. Many municipalities conduct regular audits and respond to neighbour complaints. Some cities even use data-scraping software to find illegal listings.

Join local host groups on social media or through Airbnb to stay current with changing rules. These connections can help you learn what works for other hosts in your area.

Know the Rules Before You Host

Running an Airbnb in Canada means dealing with different rules in each city and province. It's your job to know the license requirements, zoning laws, tax obligations, and insurance needs that apply to your property. Make learning the rules the first item on your hosting checklist.

Following these guidelines helps avoid fines and keeps your hosting business running smoothly. Your effort to understand and follow local regulations pays off with a better hosting experience.

Remember, what works in Vancouver won't necessarily work in Toronto or Montreal. Some areas welcome short-term rentals with simple rules, while others have almost banned them completely. Do your homework before you list your place to avoid headaches later.

The most successful hosts update themselves on changing rules and build good relationships with their neighbours. Hosting can be rewarding when done right, allowing you to earn extra income and share your community with travellers.