How to Legally Rent Out a Room in Your Ontario Home

By The Truelo Team

The kids have moved out, the house is quiet, and that spare bedroom has turned into a very expensive storage room. Sound familiar?

Renting it out is a popular fix, and it's completely legal in Ontario. But a few details are worth sorting out before you post that first listing. Here's what we'd want to know if it were our own house.

Start with one question: what will you share?

Almost everything else depends on whether your tenant will share a kitchen or bathroom with you.

If they will, and you live in the home too, Ontario's main rental law (the Residential Tenancies Act) generally doesn't apply. Steps to Justice, a free legal education site, points to this exception. In practice, Legalline says you can usually end the arrangement without a formal eviction, as long as you've kept up your end of any agreement. If a money dispute comes up, McMaster University's housing office says it goes to Small Claims Court.

If your tenant gets their own kitchen and bathroom, like a basement suite, the full rules apply, including how you can end the rental and how much you can raise the rent.

One catch: the exception only works if you actually live in the home when you rent the room, as an Ontario court decision explains. Not sure where you land? An hour with a lawyer or community legal clinic is cheap peace of mind.

Put it in writing, even if you like each other

Rent to someone who shares your kitchen and, as the University of Guelph puts it, they're essentially a guest in your home. That's exactly why house rules should be agreed on before the move-in boxes arrive.

Your agreement should cover who lives in the home, which spaces the tenant can use, the rent and when it's due, what utilities are included, your rules on things like quiet hours, guests, smoking and pets, and how either of you can end things (and how much notice to give).

If your tenant gets their own kitchen and bathroom, most rentals need the free government standard lease. If you're sharing, Trent University's housing office says it's generally not required.

Deposits and rent increases

A heads-up: these rules apply when the full rental law covers your tenant. If you're sharing a kitchen or bathroom, your written agreement sets the terms.

Ontario is strict about deposits. Tenant.ca reports that landlords can only collect last month's rent and a refundable key deposit. No damage, security or pet deposits.

You can raise the rent once a year with 90 days' written notice, according to a government announcement reported by REMI Network. The Ontario government's rent increase page caps increases at 2.1% for 2026 and 1.9% for 2027.

Choosing who moves in

If you share a kitchen or bathroom, the Ontario Human Rights Commission says the usual rules about picking tenants don't apply, so you're free to choose who you're comfortable living with.

If your tenant will have their own kitchen and bathroom, you can't turn someone down because of things like race, age, family status or disability. References and credit checks are still fair game.

Call your insurance company (yes, really)

This is the step people skip most. The Insurance Bureau of Canada warns that a regular home policy may not cover a tenant's belongings or liability. If a tenant causes a fire and your insurer never knew about them, your claim could be denied. Encourage your tenant to get their own tenant insurance, too.

Got a mortgage? MoneySense reports that renting a room in the home you live in generally won't cause problems with getting or renewing it. Technically, though, you need to tell your lender, so check your terms first.

Smoke alarms, city rules and Airbnb

Every Ontario home needs a working smoke alarm on every floor and outside bedrooms, according to the City of Midland. You also need a carbon monoxide alarm if you have a fuel-burning appliance, a fireplace or an attached garage. The City of Barrie says new carbon monoxide rules started January 1, 2026, so check with your local fire department.

Cities set their own rules about renting rooms, too. North Bay, for example, lets you rent up to two rooms without a licence. A quick call to your city before you advertise can save you a headache.

Thinking of renting by the night? That's a different game. Legalline says stays under 28 days are generally treated as short-term rentals.

Yes, the taxman wants a cut

The Canada Revenue Agency lists renting out a bedroom as taxable rental income. The good news: you can deduct part of your costs. H&R Block explains that you can claim expenses for shared spaces like the kitchen and bathroom, and TurboTax Canada says to report it on form T776, even in a year you lose money.

Renting a room can also change your tax bill when you eventually sell. Money.ca reports that a small rental may not change how the CRA treats your home, but sources differ, so ask an accountant before you sell.

Before you list the room

• Decide what you'll share with your tenant
• Write up your agreement (or use the Ontario standard lease if it applies)
• Know what deposits and rent increases are allowed
• Call your insurer and check your mortgage
• Test your smoke and carbon monoxide alarms
• Check your city's rules
• Keep records of rent and costs for tax time

Renting a room works best when everyone knows what to expect from day one. Spend an afternoon on this list now and you'll save yourself a lot of awkward conversations later.

This article is general information, not legal advice. For your own situation, talk to a lawyer, paralegal or community legal clinic.

Further reading

• Steps to Justice: Find out if the Residential Tenancies Act applies
• Legalline: Do tenants have rights if they only rent a room?
• Ontario: Guide to the standard lease
• Ontario Human Rights Commission: Advertising rental housing
• Insurance Business: Clients renting? Make sure they are insured
• Canada Revenue Agency: Collecting rental income