Short-Term Rentals in Ontario: What Landlords and Investors Need to Know

Platforms like Airbnb and VRBO have created new income opportunities for Ontario property owners — but municipal regulations and tax obligations differ significantly from long-term rental.

Lease and Rental Management

Platforms like Airbnb and VRBO have created new income opportunities for Ontario property owners — but municipal regulations and tax obligations differ significantly from long-term rental.

Short-term rental (STR) regulations in Ontario are set at the municipal level, and the rules vary significantly between cities. Kitchener, Waterloo, Cambridge, and Guelph each have their own licensing requirements, permitted zones, and operational rules for properties listed on short-term rental platforms.

Ontario Tenancy Law

Most Ontario municipalities that have adopted STR regulations require: a short-term rental licence from the city, a maximum number of operating days per year (often 180 or 240 days), registration with the platform, and collection and remittance of municipal accommodation tax (MAT).

Income from STR activity is taxable as either rental income or business income depending on the level of services provided. Purely passive rentals (access only) are rental income. If significant services are provided — cleaning, concierge, breakfast — the CRA may characterize the income as business income, which affects deductible expenses and HST collection obligations.

Protecting Landlord Rights

Principal residence exemptions for capital gains may be affected if a portion of the home is used for STR. Property owners who rent rooms or secondary suites on short-term platforms should consult a tax professional to confirm how the exemption applies to their specific situation.

Long-term residential tenants have significantly stronger legal protections than short-term guests. Mixing long-term tenancies and STR in the same building can create conflict and management complexity. Many investors choose to dedicate a property exclusively to one use type to avoid these complications.

Devon Moore, Operations Lead Co-Founder & Operations Lead — D&D Property Management

Devon Moore is the co-founder and Operations Lead at D&D Property Management, managing rental properties across Kitchener-Waterloo, Cambridge, Guelph and Waterloo Region.