Regulation of short-term rentals (STRs) in Canada has been tightening in 2025, with governments at every level introducing stricter rules on licensing, principal residence requirements, and enforcement. For real estate agents, the ability to navigate this evolving framework is now just as important as understanding market demand or rental returns. Across Canada, governments at every level are cracking down with stricter licensing requirements, principal residence mandates, seasonal limits, and tougher enforcement. For real estate agents, this means that advising clients is no longer just about projecting occupancy rates and nightly revenue. Success now depends on understanding and anticipating the regulatory environment.

The Federal Layer

One of the most consequential national changes came into effect in January 2025. The Canada Revenue Agency (CRA) now denies tax deductions for the non-compliant amount of STR expenses. This includes mortgage interest, insurance, utilities, and cleaning costs. Even partial noncompliance can result in the loss of deductions for the affected period, which can sharply erode investor returns.

To support enforcement at the local level, Ottawa also launched the $45.9 million Short-Term Rental Enforcement Fund. This fund provides municipalities with resources to monitor listings, pursue violations, and coordinate with platforms like Airbnb and VR.

The Provincial Layers

British Columbia

British Columbia has taken the lead in systematizing STR oversight. As of May 1, 2025, all STR hosts in communities must register with the provincial STR Registry. Hosts must also provide proof of principal residence, and listings that fail to display a valid registration number are automatically delisted.

The province enforces a principal residence requirement in most urban areas, allowing STR use only in a host’s primary home and, in some cases, a single secondary suite. Platforms are legally required to verify registration numbers and cancel noncompliant bookings. Municipalities are now backed by a provincial Compliance and Enforcement Unit with the authority to issue fines of up to $50,000 and seek injunctions. B.C. properties marketed as STR opportunities must be screened for both provincial registration eligibility and local zoning restrictions.

In Kelowna, STRs are restricted to principal residences and require both a local business license and provincial registration. Hosts must reside in the property for at least 240 days per year.

Interestingly, Tofino appears to be looking at loosening requirements recently. The District does enforce strict local bylaws, such as limiting rentals to three bedrooms and six guests, amongst others, but its relationship with provincial rules has changed.

In March 2024, council opted in to B.C.’s new principal-residence requirement, which came into force that November. Less than a year later, in March 2025, the District reversed course and asked to be exempt. By July 2025, the Province agreed, setting November 1, 2025, as the date Tofino will officially return to running under its own system without the provincial principal-residence overlay. This highlights how STR rules should be seen as moving targets, and tracking both local and provincial decisions is a core part of due diligence.

Alberta

Calgary introduced a new licensing system in April 2025 that distinguishes between primary and non-primary residence STRs. Non-primary STRs face higher fees and greater oversight, and if the city’s rental vacancy rate falls below 2.5 percent, a moratorium on new non-primary STR licenses is automatically triggered. STR use is also prohibited in designated affordable housing units.

Banff remains one of the strictest jurisdictions in the country, maintaining a freeze on new STR licenses and gradually phasing out conversions of residential units into tourist accommodations. Canmore has restricted STRs to designated tourist zones, effectively closing the door on new licenses in most residential neighbourhoods. These measures reflect the growing use of zoning as a regulatory tool.

Ontario

Toronto continues to operate under a principal residence rule, allowing entire-home rentals for a maximum of 180 nights per year while permitting year-round room rentals within a primary residence. In 2025, the city expanded requirements by introducing stricter documentation standards, including emergency contact details and exit diagrams that must be displayed in each STR unit. The Municipal Accommodation Tax in Toronto is currently 8.5%, increased temporarily from June 1, 2025, to July 31, 2026, with a separate increase of Airbnb accommodations to 12%.

Elsewhere in Ontario, municipalities such as Ottawa, Niagara, and Fort Erie have also introduced new rules. These include restrictions that limit STR use to principal residences, mandatory registration, and in some cases, zoning bylaws that confine STRs to designated tourist or mixed-use areas. Waterloo updated its rental licensing bylaw in early 2025 to restrict STRs to principal residences in low-rise residential zones.

For real estate agents, the variability across Ontario highlights the need to check municipal bylaws before advising on any property’s STR potential.

Quebec

Quebec has maintained its long-standing requirement that all STR hosts hold a valid permit issued by the Corporation de l’industrie touristique du Québec (CITQ).

At the municipal level, in Montreal, 2025 brought an additional and highly restrictive measure: STRs may now only operate between June 10 and September 10 each year. This means that even properties that comply with the principal residence rule can only generate STR revenue for three months annually.

Fines for violations cut into profitability, and platforms face penalties if they allow unregistered or off-season listings to remain online. Agents working with clients interested in Montreal properties need to recalibrate revenue projections and be candid about the reduced earning potential under this seasonal model and discuss alternatives such as mid to long-term rental models.

Yukon

Whitehorse is currently in the process of reviewing short-term rental regulations; a draft was released for public review in May 2025.

What Real Estate Agents Need to Do

The tightening of STR regulations means that agents should integrate regulatory due diligence into their advisory role. This includes verifying whether a property qualifies as a principal residence, checking zoning permissions, confirming license and registration requirements, and recalculating revenue projections based on legal limits rather than historical performance.

Agents should also warn clients about the risks of noncompliance, which include fines, delisting, tax penalties, and in some cases, the loss of the STR business model altogether. Preparing clients requires building compliance into the foundation of the investment strategy. Again, discussing alternative models, such as mid to long-term models, provide options for clients.
Keeping up with changes is critical. The Brokers Playbook Community offers tools, coaching, and resources to help agents track regulatory shifts, adapt strategies, and advise clients effectively.