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Toronto Short Term Rental Regulation: A Guide For Airbnb Hosts

Toronto, Canada

What are short term rental (Airbnb, VRBO) regulations in Toronto,Canada?

The City of Toronto has implemented a comprehensive set of regulations for short-term rentals, such as those listed on platforms like Airbnb and Vrbo. These rules aim to balance the benefits of home-sharing with the need to protect long-term rental housing supply and maintain the stability of residential neighborhoods. Here's what you need to know:

Principal Residence Requirement

The most significant aspect of Toronto's short-term rental regulations is that hosts can only rent out their principal residence12469. This means the property must be where the host lives and the address they use for bills, identification, taxes, and insurance118. Investment properties and secondary suites that are not the host's primary home cannot be used for short-term rentals129.

Registration and Licensing

All short-term rental operators must register with the City of Toronto and obtain a registration number, which must be displayed on all listings12418. There is a $50 annual registration fee124. Short-term rental companies like Airbnb must also be licensed by the city, which includes a one-time $5,000 application fee and $1/night booked fee24.

Rental Limits and Restrictions

Hosts can rent their entire primary residence for a maximum of 180 nights per year12610. There is no limit for renting up to three rooms within a host's home1210. Secondary suites and laneway suites can only be short-term rented if the host lives there full-time1214.

Taxes and Record Keeping

Short-term rental operators must collect and remit a 6% Municipal Accommodation Tax (MAT) on all rentals less than 28 consecutive days1418. Hosts are also required to keep detailed records of all short-term rental activity and provide them to the city upon request1418.

Enforcement Challenges

While Toronto's regulations are intended to crack down on short-term rentals, enforcement has proven challenging. Many multi-unit hosts continue to operate and exploit loopholes, such as listing properties for 28+ days but allowing shorter bookings off-platform712. The city has limited resources to fully enforce the rules12.

The Current Short-Term Rental Landscape

Despite the regulations, Toronto remains a top market for short-term rentals, especially on Airbnb. As of 2023, there were over 8,400 active Airbnb listings in the city2. However, the crackdown has prompted some platforms to exit the market entirely, such as Vrbo in January 2021320.

The city continues to monitor the effectiveness of the regulations and explore ways to improve compliance7. Prospective hosts should carefully review the rules and ensure their property is eligible before listing it for short-term rental. Failure to comply can result in substantial fines and penalties116.

Ultimately, Toronto's short-term rental regulations attempt to strike a balance between supporting the sharing economy and prioritizing housing affordability for long-term residents. While not perfect, they provide a framework for responsible home-sharing in Canada's largest city.

Starting a Short Term Rental Business in Toronto

The City of Toronto allows short-term rentals (any rental less than 28 consecutive days) in a host's principal residence only12. This means investment properties and vacation homes do not qualify for short-term rental registration13.

Hosts can rent their entire principal residence for a maximum of 180 nights per year, or up to three bedrooms within their principal residence with no night limit12820. Both homeowners and tenants can participate, as long as the rental unit is their principal residence where they live and use for bills, identification, taxes and insurance123.

Renters should check if short-term rentals are allowed under the terms of their lease agreement13. Condo owners must also ensure their condo corporation's by-laws permit short-term rentals, as some buildings prohibit or restrict this use513.

Short Term Rental Licensing Requirement in Toronto

All short-term rental operators must register with the City of Toronto and include their registration number on any listings123. There is an annual registration fee of $50128. Registered operators must also collect and remit a 4% Municipal Accommodation Tax (MAT) on all rentals less than 28 nights128.

Short-term rental companies like Airbnb and VRBO must also obtain a license from the city, pay a one-time $5,000 fee, and remit $1 per night booked125. These companies are required to share data on listings and remove any unregistered listings12.To register, hosts must provide1313:

  • Contact information and address
  • Details of the short-term rental
  • Name and number of a 24/7 emergency contact
  • Government ID proving the rental is their principal residence

Hosts must also313:

  • Provide guests emergency contact info and a 911 exit plan
  • Maintain detailed rental records for city inspection
  • Have liability insurance of at least $1 million

Required Documents for Toronto Short Term Rentals

To register a short-term rental, operators need to submit the following to the city13913:

  • A completed short-term rental registration application
  • Contact information and rental property address
  • Details on the short-term rental (entire home vs rooms)
  • Name and phone number of a 24/7 emergency contact
  • Government-issued ID proving the rental is their principal residence
  • Proof of $1 million liability insurance
  • A $50 annual registration fee paid by credit card

Hosts will receive their registration number by email once approved by the city. The number must be posted on all short-term rental listings and advertisements13. Registration is valid for one year and must be renewed annually13.

Toronto Short Term Rental Taxes

Short-term rental operators must collect and remit a 4% Municipal Accommodation Tax (MAT) on all rentals less than 28 nights12815. Airbnb collects and remits this tax on behalf of hosts in Toronto15.

Rental earnings are also subject to income tax. Hosts should consult an accountant on how to properly report short-term rental income and expenses5. GST/HST may also apply on short-term rentals5.

Toronto-wide Short Term Rental Rules

  • Short-term rentals are allowed in residential and mixed-use zones across Toronto1218.
  • Rental units must have working smoke and CO detectors, meet all safety standards, and not violate any city bylaws (noise, property standards, etc.)13.
  • Hosts can be fined up to $100,000 for bylaw violations114.
  • Hosts must provide guests with emergency contact info, exit maps, and 911 instructions313.
  • Detailed transaction records must be maintained and provided to the city upon request3.

Does Toronto strictly enforce STR rules?

Based on discussions from hosts on BiggerPockets17 and Reddit19, Toronto does actively enforce its short-term rental regulations, especially the principal residence requirement. The city relies on complaints to investigate potential illegal rentals16.

However, some hosts admit to finding loopholes or continuing to operate without registration1719. Overall, Toronto has stricter rules than many other cities, so it is not considered as "Airbnb friendly" as some destinations17. But a legal short-term rental business focused on home-sharing is still very viable.

How to Start a Short Term Rental Business in Toronto

  • Ensure your principal residence is eligible for short-term rental12
  • Register with the city and pay $50 annual fee13
  • Obtain $1 million liability insurance13
  • Outfit unit with smoke/CO detectors and fire safety plan13
  • Create detailed listing with registration number on sites like Airbnb1
  • Provide guests with 24/7 emergency contact and 911 info313
  • Collect and remit 4% MAT tax on stays less than 28 nights12
  • Maintain detailed records of all transactions for city inspection3
  • Renew city registration annually13

Who to contact in Toronto about Short Term Rental Regulations and Zoning?

Contact the City of Toronto's Short-Term Rentals Office:

Website: https://www.toronto.ca/community-people/housing-shelter/short-term-rentals/
Phone: 416-395-6600
Email: ShortTermRentals@toronto.ca

You can also contact Toronto Building about zoning and building code questions:
Website: https://www.toronto.ca/city-government/planning-development/toronto-building/
Phone: 416-397-5330
Email: buildingstandards@toronto.ca

What do Airbnb hosts in Toronto on Reddit and BiggerPockets think about local regulations?

On Reddit, there are mixed opinions from Toronto Airbnb hosts regarding the regulations19. Some still operate without registration, while others appreciate the oversight to reduce "bad actors". Key concerns are the principal residence requirement and 180-night cap.

BiggerPockets discussions show Toronto hosts adapting to the new rules17. Many discuss the challenges with the principal residence rule and brainstorm alternate rental strategies. Overall, hosts seem to be coming to terms with the regulations but note they are quite restrictive compared to other markets.

In summary, Toronto has comprehensive short-term rental regulations focused on allowing home-sharing while restricting full-time vacation rentals. Hosts must carefully review all requirements before starting an Airbnb business. But for those operating legally out of their principal residence, Toronto remains a great city for short-term rentals. The rules aim to balance the needs of hosts, guests, and the wider community.

Reveal your property’s rental profitability

Buy this property and list it on Airbnb.