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Guide to Airbnb license registration in Toronto

Guide for Airbnb license registration in Toronto

Who wouldn’t want to earn some extra income while doing their regular jobs or running their own businesses? In a city like Toronto, this dream of making passive income can become a reality without too much hassle. Among the many tenants and property owners, websites like Airbnb, Expedia, and Booking.com have become quite popular. This is where short-term rentals can be a great option. The concept of short-term rentals has revolutionized the hospitality industry, providing travelers with a home-like experience and homeowners with an additional source of income. You can read more about this form of rental here.


However, to legally rent out your home or a specific room for short periods, you need a short-term rental license or commonly known as an AirBnb license registration in Toronto. This license is a crucial step in your journey as a host, and it’s important to understand what it entails.


What is a Short Term Rental License?

A short-term rental license is a legal document issued by the City of Toronto that permits homeowners to rent out their principal property for less than 28 consecutive days. This license is a testament to the city’s commitment to ensure a balance between tourism, residential peace, and housing availability. 


As a host, you’re required to register with the city and remit a Municipal Accommodation Tax (MAT) of 6% on all rentals. The application process, available through the City of Toronto’s website, can take several weeks. This comprehensive guide will walk you through the entire process, ensuring you’re well-equipped to embark on your hosting journey.


Are you eligible for an Airbnb license registration in Toronto?

Any homeowner who resides in their property as their primary residence can apply for a Short-Term Rental license in Toronto. This includes owners of condominiums, apartments, and houses. The city has put this rule in place to prevent commercial operators from buying properties solely for short-term rentals, which could lead to a housing shortage.


Here is a brief eligibility criteria for applying for an STR:

  1. You must be at least 18 years old.

  2. The property you plan to rent must be your principal residence in Toronto.

  3. You must be able to provide proof that you live at your principal residence.


You’re allowed to rent only your principal residence on a short-term basis. This is the home where you live and the address you use for official documents like bills, ID cards, taxes, and insurance. If you have an insurance policy, it’s important to understand how operating a short-term rental might affect it. You might want to discuss with your insurance company about the right insurance product for short-term rentals.


Things to keep in mind:


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Local Bylaws and Neighborhood Restrictions-


Local regulations and neighborhood-specific bylaws can significantly impact short-term rentals. Some areas might have zoning restrictions or ordinances limiting the duration or frequency of rentals. For instance, certain communities may enforce minimum stay requirements or cap the number of days a property can be rented out within a specific timeframe. Understanding these restrictions is critical as violating them can lead to fines or legal consequences.


Additionally, homeowner associations or condominium boards might impose their own set of rules governing short-term rentals within their properties. These rules might encompass guest behavior, parking restrictions, noise regulations, or the use of common amenities. Violating these regulations could result in penalties or even jeopardize your standing within the community.


Impact of Licensing on Insurance-


Hosting short-term rentals can affect insurance coverage and premiums for your property. Traditional homeowner insurance might not adequately cover short-term rental activities. Standard policies often exclude or have limited coverage for commercial activities like renting out your property, leaving you exposed to potential risks.


To mitigate risks, it's advisable to seek specialized insurance designed for short-term rentals. This coverage typically includes protection against property damage, liability claims from guests, loss of income due to property damage, or even identity theft arising from guest activities. This insurance helps bridge the gap left by traditional policies and provides comprehensive coverage tailored to the risks associated with hosting.


Moreover, failing to disclose your short-term rental activities to your insurance provider can invalidate your policy or lead to claim denials. Engaging in transparent communication with your insurer is crucial to ensure you have appropriate coverage that aligns with your hosting activities.


Short-term rental rules and regulations for different property types


In Toronto, you can rent out any type of housing - be it a house, apartment, or condominium - on a short-term basis, provided it’s your principle residence and you are eligible for an STR License based on the rules in the section above. 


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Apartments

One of the most common types of property that is rented out for a Short-Term. Apartments are an ideal match for a small family/group on a vacation. These buildings are often managed by Airbnb property management companies. As a host, you should be aware of your responsibilities under the Residential Tenancies Act and your lease agreement with your management company.



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Duplex, Triplex or Fourplex 

These are houses with two, three, or four separate units, often spread over multiple floors. If you live in one of these units, you can only rent out the part of the house that you live in. Renting out the other units is not allowed.


Picture of a condominium

Condominium 

An ideal match for a business traveler, if you live in a condominium, you can rent it out short-term, provided it’s your primary residence. However, some condominium corporations have their own rules about short-term rentals, including some that prohibit them. Make sure you check with your corporation to understand the rules and only then proceed with applying for an STR. 


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Investment Property 


Only your principal residence can be rented out on a short-term basis. Secondary or investment properties can be rented out long-term. In case you have an investment property and want to understand the probable options with it, contact us!


Process for Airbnb license registration in Toronto


checklist

Step 1: Check Your Eligibility

Before you begin the registration process, ensure that you meet the eligibility criteria:


  1. You must be at least 18 years old.

  2. The property you plan to rent out must be your principal residence in Toronto. This is the home where you live most of the time and the address you use for official documents like bills, identification, taxes, and insurance.

Step 2: Prepare Necessary Documents

Step 3: Begin Registration

Step 4: Pay the Registration Fee

Step 5: Await Approval

Step 6: Post Your STR License Number

Step 7: Collect and Remit the Municipal Accommodation Tax (MAT)


Renewal

Your STR license is valid for one year. You must renew your license every year on the same date or up to six days in advance. The city will send you a notice of renewal along with instructions on how to renew your license before your registration renewal date.


Still confused? Fret not, you’re in the right hands. Contact us! And we will assist you in securing an AirBnB license while you relax at your home. Guestilo provides free AirBnB license consultation and registration to our partners without the hassle of going through the entire process themselves. So hurry, and get in touch with us now!



Disclaimer- The information provided above is dynamic and changes as per city regulations. Keep in mind to check the official City of Toronto website to stay up-to-date with the latest rules for an STR License.


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