Short-Term Rental Compliance in Alberta: What Landlords Need to Know in 2025

As Airbnb and short-term rentals continue to grow in popularity, cities across Alberta are tightening the rules. In 2025, landlords operating short-term rental (STR) properties — especially in places like Calgary, Edmonton, Banff, and Canmore — are now facing increased regulation, tax scrutiny, and operational risks if they don’t comply.

Whether you’re a first-time investor or a seasoned landlord, understanding these changes is critical. Here's what’s happening — and how it's impacting real people like you.

The 2025 Crackdown: Calgary Takes the Lead

In April 2025, the City of Calgary introduced sweeping changes to its short-term rental bylaws. These were not small tweaks — they represented a shift in how the city manages STRs, and it’s already making waves in the landlord community.

Under the new rules:

• All short-term rental operators must hold a valid business license.

• If you're renting a non-primary residence, you fall under a different, more tightly regulated category.

• A moratorium on new licenses will be triggered if Calgary’s vacancy rate drops below 2.5% — it’s currently at 4.8%, but that could change quickly if housing supply tightens.

These changes aren’t just about paperwork. They're tied directly to concerns around housing affordability, tenant displacement, and neighbourhood complaints — especially in downtown Calgary and popular Airbnb zones like Beltline, Mission, and Kensington.

We’re seeing landlords pause or even exit the STR market because of uncertainty. Others are shifting to medium-term furnished rentals (30+ days) to stay compliant and reduce risk.

How the CRA Is Getting Involved: New Tax Rules Are Already in Effect

It’s not just municipalities cracking down — the Canada Revenue Agency (CRA) is watching short-term rental income more closely than ever.

As of January 1, 2024:

• If you're not compliant with your local STR rules (e.g., no license or operating in a restricted zone), you cannot deduct expenses like property taxes, mortgage interest, utilities, or repairs related to that property.

• This applies whether you own a basement suite, a condo, or a whole house.

So yes — if you’re running an illegal Airbnb, the CRA may still tax your income, but you won’t be able to deduct your costs.

Let that sink in. You pay taxes on your gross earnings while being denied write-offs. The financial hit can be massive, especially with rising mortgage rates and inflation increasing the cost of upkeep.

What About Canmore and Banff?

If you own property in Canmore or Banff, you already know how strict the rules are. But for those considering investing there — beware:

• Banff essentially bans most short-term rentals unless you're zoned for commercial accommodation.

• Canmore caps the number of short-term rental licenses and has a waiting list in some areas. Even tourist homes must meet rigorous criteria.

We’ve worked with clients who purchased thinking they could Airbnb a suite, only to find they were locked out of the STR market — leaving them with a property they can’t use profitably.

What Should Landlords Do Now?

If you're currently operating — or thinking of entering — the short-term rental (STR) market in Alberta, now is the time to get serious about compliance and risk management. The regulatory environment is evolving quickly, and landlords who aren’t prepared could face heavy fines, denied tax deductions, or even a forced shutdown of their operations.

Here’s a deeper look at what you need to be doing in 2025:

Confirm Your Municipal Status and Licensing Requirements

Every municipality in Alberta handles STRs differently, and ignorance is no longer an excuse. In Calgary, for example, the city has introduced two licensing tiers depending on whether you rent out your entire home or just a portion of it. There are also new safety requirements including posting emergency exit plans, installing interconnected smoke alarms, and meeting minimum building code standards. Even cities that previously had looser oversight, like Edmonton, are beginning to tighten zoning laws in response to housing affordability concerns and neighbour complaints. Bottom line, Before you list a property on Airbnb, check with your city to confirm:

• Whether STRs are allowed in your zone

• What licenses or permits you need

• Whether there are occupancy limits or parking regulations

Non-compliance can lead to daily fines, forced delisting, and even legal action.

Ensure CRA Compliance and Proper Tax Reporting

Review Your Insurance Coverage

Talk to Your Accountant — Ideally Before You File

Why This Matters Now More Than Ever

With inflation, higher interest rates, and tighter regulation, short-term rentals aren’t the easy cash cows they used to be. But if managed properly — and compliantly — they can still be highly profitable.

As accountants and advisors, we help landlords structure their operations to:

• Reduce tax exposure

• Stay compliant with CRA and municipal rules

• Protect their long-term investment strategy

Final Word

The short-term rental landscape in Alberta is changing quickly. Cities are closing loopholes, and the CRA is closing in. Whether you're an active Airbnb host or just exploring your options, staying ahead of these changes isn't just smart — it's essential.

If you’d like a second opinion on your compliance status or want to better structure your rental business for tax efficiency, reach out to Sahil & Meher Accountants and Consultants. We’ll help you avoid costly mistakes — and maximize your return.