Short-Term Rental Rules in Canada: Licensing and the Principal-Residence Crackdown

This article is general information, not legal advice, and short-term rental rules vary by municipality and change often. Always confirm the current rules with your own city (and, in BC, the province) before you list.

Over the past few years, cities across Canada have moved hard on short-term rentals. The details differ from one municipality to the next, but a common model has emerged, and if you host on Airbnb or VRBO, it is worth understanding the shape of it, along with the one rule that matters more than any other: you have to check your own municipality.

The common model: principal residence plus a licence

Two ideas show up again and again in Canadian short-term rental rules:

Principal-residence-only. Many cities allow short-term rentals only in the home you actually live in, your principal residence. The intent is to stop investors from taking long-term housing off the market to run de facto hotels, while still letting a resident rent out a spare room or their home while they travel.
A licence or registration you must display. Most regulated cities require you to register or get a licence, and to post that number in your listings. It makes enforcement straightforward: a listing without a valid number is an easy target.

Three examples show how this plays out. Treat them as illustrations of the pattern, not as rules that apply to your city.

Toronto

Short-term rentals are permitted only in your principal residence. Operators must register with the City and display the City-issued registration number in every listing and advertisement. If you rent out your entire home on a short-term basis, it is capped at 180 nights per calendar year (renting a room while you live there is not capped the same way).

Vancouver

You need a short-term rental business licence to rent for fewer than 90 consecutive days, and short-term rentals are allowed only in your principal residence. There is one licence per person, and the licence number must appear in all listings.

British Columbia (a provincial layer on top of the city)

BC is unusual in adding a province-wide rule. Under the Short-Term Rental Accommodations Act, a principal-residence requirement took effect May 1, 2024, limiting short-term rentals in covered communities to the host's principal residence, plus one secondary suite or accessory dwelling unit on the property. It applies in municipalities with a population of 10,000 or more (and some neighbouring communities), while smaller and specifically exempted areas, along with designated resort communities, are carved out. A provincial registry also became mandatory in 2025, so a valid provincial registration number is required on listings, on top of anything the city requires.

The rule that overrides all of the above: check your own city

Here is the part to take away, because it is the part that protects you. Short-term rental rules vary widely by municipality, and they change frequently. Depending on where your property is:

The night caps differ, or there may be none.
Some places allow non-principal-residence short-term rentals; many do not.
Licensing fees, application steps, and platform data-sharing vary.
Some smaller BC communities are exempt from the provincial principal-residence rule.
Some Ontario municipalities have no short-term rental bylaw at all, while others ban whole-home short-term rentals outright.

Toronto, Vancouver, and BC are not a national template. They are three data points that happen to share the principal-residence-plus-licence shape. Your municipality's current bylaw is the only rule that governs your property, so look it up on your city's website, and in BC, check the provincial rules too.

Why this is now a tax issue, not just a legal one

There is a direct financial reason to get licensed, beyond avoiding a municipal fine. As of the 2024 tax year, the Canada Revenue Agency denies income-tax deductions for short-term rental expenses to the extent the rental is non-compliant with the local rules that permit, register, or license it. In other words, operating without the licence your city requires does not just risk a bylaw penalty, it can cost you the ability to deduct your expenses against your rental income. Being properly licensed protects your deductions. (We cover that rule in detail in a companion guide to short-term rental taxes.)

A practical checklist before you list

Confirm your city allows it at your property, and whether it is limited to your principal residence.
Get the licence or registration your municipality (and province, in BC) requires.
Put the number in every listing, exactly as required.
Know your night cap, if there is one, and track your nights.
Keep proof of compliance with your records, because since 2024 it underpins your tax position.

Frequently asked questions

Can I run an Airbnb in a property I don't live in? In many cities, no. A principal-residence requirement is common, meaning you can generally only short-term rent the home you live in. Some municipalities allow non-principal-residence rentals; you have to check yours.

Do I need a licence to list on Airbnb or VRBO? In most regulated cities, yes, and you usually have to display the registration or licence number in the listing itself. The exact requirement depends on your municipality.

Are the rules the same across Canada? No. They are primarily municipal, they vary widely, and they change often. British Columbia adds a provincial layer on top of city rules. Verify your own location every time.

What happens if I operate without a licence? Beyond municipal penalties, since the 2024 tax year you can lose income-tax deductions on a non-compliant short-term rental, so being unlicensed carries a direct tax cost as well.

Rules change, so the operators who stay out of trouble are the ones who keep their licensing and records current and in one place. Habyn helps landlords keep documents, registrations, and financials organized per property. See how Habyn helps landlords.