Renting out your cottage: what to know before you list it

Renting the cottage for a few weeks each summer is how many families make the numbers work. It can help a lot. It also touches your mortgage, your insurance, your taxes and your township’s by-laws, and each of those has changed in the last few years. Check each before advertising a rental.

Start with your mortgage

How you financed the cottage matters. Lenders draw a line between a second home you use yourself and an investment or rental property.

• Insured second-home mortgages (with as little as 5% or 10% down) are designed for personal use by you or immediate family. Canada Guaranty’s second-home program lists rental properties and rental pools as ineligible. If you bought with an insured mortgage, talk to us before you rent.
• Conventional mortgages (20% or more down) give more flexibility, but the lender still needs to know how the property is used.
• A cottage bought mainly to rent is usually treated as an investment property, with at least 20% down and different lender options.

Being upfront with your lender about rental plans protects you. Our guide to second home vs investment property mortgages explains the difference.

How lenders treat cottage rental income

Many people hope rental income will help them qualify. In practice, lenders are cautious with cottage rental income:

• Many lenders do not count projected rental income on a second home at all.
• Some will consider part of a documented rental history, usually from tax returns.
• Seasonal, short-term income is viewed as less reliable than a year-round lease.

So plan to qualify on your own income first, and treat rental income as a bonus that helps with carrying costs. The affordability calculator shows where you stand without it.

You will need a licence in most cottage townships

Licensing fees and accommodation taxes vary by municipality. Lake of Bays introduced a 4% municipal accommodation tax from January 1, 2026. Confirm the current local rules, collection obligations and any exemptions for the property before setting your nightly price.

Tell your insurer first

A standard cottage policy may not cover paying guests. Some policies include limited short-term rental coverage with add-ons, and others need a separate policy. Some townships also set their own minimum, like the $2 million liability insurance required in the City of Kawartha Lakes. See cottage insurance in Ontario.

Talk to Jeff and Emily

Thinking about renting the cottage to help carry it? Book a call and we will check how your mortgage and lender see rental use.

Or call or text 416-628-9682

Book a call

Income tax and HST

This part is general information. Talk to an accountant before your first booking.

• Rental income is taxable. It is usually reported on form T776. Because you also use the cottage yourself, expenses are generally split between personal and rental use.
• HST on short stays. Rentals of less than one month are generally taxable supplies. Ontario HST is 13%. Rentals of one month or more are generally exempt.
• The $30,000 small supplier threshold counts all of your taxable supplies, not only rent. Above it, you generally must register and charge HST.
• Licence compliance matters for tax too. Federal rules now deny income tax deductions for short-term rentals operating where they are not allowed or without a required licence.
• Capital gains. Renting the whole cottage can be a change in use for principal residence purposes. See principal residence designation.

Estimate income honestly

Start from real weeks, not a full summer at peak rates. Subtract platform fees, cleaning, management if you use it, licence fees, accommodation tax, extra insurance, wear and tear, and income tax. Then compare the net with your yearly cost of owning. For many families, a few weeks of rental covers a slice of the carrying cost, which is still useful.

Ways to manage it

• Do it yourself: most income, most work, and you need someone close by. Some townships, like Muskoka Lakes, require a responsible person nearby.
• Local property manager: handles bookings, cleaning and calls for a share of revenue.
• Family and friends only: simpler, and often easier on your insurance and lender, though it may still need a licence if money changes hands.

Our take

Rental can make a cottage more affordable, but buy one you can carry without it. Check the township rules for the exact address before you make an offer, and tell your lender and insurer your plans. If you want help testing the numbers, reach us at get started.