How to rent out your cottage in Ontario

What Ontario owners need to check before renting a cottage to vacationers: the licence from your municipality, taxes, insurance and safety. Each point links to the official source.

General information, not legal or tax advice. Rules change and differ from one municipality to the next: confirm with your municipality, your insurer and an accountant before you rent.

Is a licence needed? Ask your municipality

Ontario has no province-wide registration for short-term rentals. The rules come from the municipality where the cottage stands (city, town or township), and from your condominium corporation if it is a condo. More and more cottage-country municipalities now require a short-term rental licence. Some examples:

City of Kawartha Lakes: a licence is required if you rent all or part of your property for less than 28 consecutive days; applications ask for proof of ownership, a site diagram and floor plan, and liability insurance of at least $2,000,000.
Township of Lake of Bays: licensing by-law 2024-065; the premises are inspected before approval, and repeated violations lead to suspension.
Township of Muskoka Lakes: short-term rental licensing by-law 2025-049 is in effect.
Township of Tiny: a licence for rentals of 28 days or less, with a cap on the number of licences.

Look for “short-term rental” on your municipality’s website or call its by-law or licensing office. Ask whether a licence is needed, what it costs, whether there is a cap or a waiting list, how many guests are allowed (often tied to septic capacity and bedrooms), and whether a Municipal Accommodation Tax applies. If you get a licence number, add it to your listing: guests trust listings that show one.

Vacation stays are not residential tenancies

Ontario’s Residential Tenancies Act (section 5) does not apply to accommodation provided to the vacationing public or occupied for a seasonal or temporary period in a cottage or cabin establishment or a vacation home. A vacation rental is a contract between you and your guest, so put the terms in writing: dates, price, deposit, cancellation, maximum guests and house rules. Our free rental agreement template covers all of it.

If someone wants the cottage for months as their home, that can become a tenancy with different rules: get legal advice first.

Income tax and the rule on non-compliant rentals

Rental income must be reported on your tax return; the CRA’s Rental Income guide (T4036) explains what you can deduct and when providing extra services makes it business income.

Since 2024, the CRA does not allow deductions for non-compliant short-term rentals: a property rented for less than 90 consecutive days in a place where short-term rentals are not allowed, or without the registration, licence or permit the province or municipality requires. The expenses for the non-compliant days are denied (CRA). Keep your licence and records with your tax papers.

HST: the $30,000 small supplier threshold

Short stays at a cottage (less than a month, at more than $20 a day) are taxable supplies. You must register for and charge HST (13% in Ontario) once your taxable revenues from all your businesses go over $30,000 in one calendar quarter or in four consecutive calendar quarters. Below that, you are a small supplier and registration is optional (CRA guide GI-025).

Some municipalities also charge a Municipal Accommodation Tax on short stays: ask yours whether it applies and who collects it.

Tell your insurer

A regular home or cottage policy may limit or exclude coverage when the property is rented. Tell your insurer how often you rent and ask for a rental endorsement or a policy made for vacation rentals. Check the liability limit: municipalities that license rentals often ask for proof of it (Kawartha Lakes: at least $2,000,000).

Safety: alarms, water, fire and boats

Working smoke alarms on every storey and outside sleeping areas.
Carbon monoxide alarms: since January 1, 2026, the Ontario Fire Code requires them on every storey and next to each sleeping area in homes with a fuel-burning appliance, a fireplace or an attached garage (Ontario: carbon monoxide safety). Test all alarms before each season.
A fire extinguisher, a first-aid kit and a sheet with the civic address for 911, the nearest hospital and your phone number.
If the water comes from a private well, have it tested: Public Health Ontario tests private well water for bacteria free of charge. Tell guests whether the tap water is drinkable.
Fire pits: follow your municipality’s burn rules and fire bans, and tell guests about them.
Boats: properly sized life jackets for everyone; anyone driving a motor boat needs a Pleasure Craft Operator Card.

House rules guests understand

Write down maximum guests, quiet hours, pets, smoking, fires, parking, garbage and wildlife, and septic dos and don’ts. Put them in the agreement and in a binder at the cottage. Clear rules prevent most problems with guests and neighbours, and many licensing by-laws ask you to post a code of conduct inside the cottage.

Pricing by season

Many Ontario cottages rent by the week in July and August (often Saturday to Saturday) and by the night in spring, fall and winter, with a two- or three-night minimum and higher rates on long weekends. Your price is your call. If you list on booking sites, see what their fees cost you a year with our booking fee calculator.

Checklist

Municipality: licence needed? Fee, cap, occupancy, accommodation tax
Condo: do the declaration and rules allow short stays?
Insurer told; liability limit checked
Smoke and CO alarms on every storey, extinguisher, 911 address sheet
Well water tested (if private well)
Written rental agreement and house rules
Income and HST: talk to an accountant; keep the licence with your records

Ready to find guests?

List your cottage on Cottage & Chalet Rentals: guests write to you directly, you agree on the price and are paid your own way. No commission, no booking fees; free under our founding offer.

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Sources (official)

Checked against official sources on 2026-10-23

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