Navigating Quebec’s Law 25 for Seasonal Rentals: Compliance Steps to Avoid Fines

The prospect of earning income from your Quebec chalet is appealing, but the shadow of Law 25, with its stringent regulations and the threat of inspectors from the Corporation de l’industrie touristique du Québec (CITQ) and Revenu Québec, can be paralyzing. Many owners believe that getting a registration number is the main hurdle, or that renting for only a few weeks a year exempts them from the most complex rules. This is a fundamental, and potentially expensive, misunderstanding of the law.

The regulatory framework is not a series of suggestions; it is a zero-tolerance system. Navigating it successfully is not about checking boxes, but about executing a precise operational sequence. The most critical error an owner can make is performing these steps out of order, such as securing a CITQ number for a property in a zone where rentals are ultimately forbidden. This single mistake renders the registration invalid and exposes you to the full force of penalties.

This guide abandons the platitudes. It is structured as a direct consultation, designed to shift your perspective from anxious owner to diligent operator. We will dissect the process into its non-negotiable components, focusing on the critical points of failure that others overlook. This is not about simply getting legal; it’s about building a defensible compliance file that withstands scrutiny. The objective is to transform fear into a structured, proactive strategy.

This article provides a detailed roadmap for every Quebec seasonal rental owner. Follow this guide to understand the exact sequence of actions required, the specific documentation you must maintain, and the strategic decisions that protect your investment from penalties and liability.

The Mandatory Steps to Get Your Establishment Number Before Listing on Airbnb

Obtaining a CITQ establishment number is not the first step; it is the culmination of a mandatory preliminary process. Approaching this as a simple application is a procedural error. The government’s goal is to ensure compliance at every level—municipal, provincial, and financial—before a number is ever issued. The recent enforcement efforts have been effective; by early 2024, Quebec achieved a 90% compliance rate with its short-term rental (STR) regulations, a significant increase from just 58% in August 2023. This demonstrates that the system is stringent but navigable if followed precisely.

It is crucial to understand whether your property is considered your principal residence or a general tourist accommodation (e.g., a secondary cottage). The requirements and forms differ. A principal residence is where you live for most of the year, and its rental may be subject to seasonal restrictions in certain cities. A general tourist accommodation must be located in a zone specifically designated for tourism by the municipality. Mixing these up at the application stage will lead to rejection.

The only correct method is to follow a strict chronological order. Each step builds upon the successful completion of the previous one. Deviating from this sequence will result in wasted time, fees, and a rejected application. You must treat this not as a checklist of items to gather, but as a linear path with no shortcuts. The following plan is the official, non-negotiable sequence.

Failure to follow this exact sequence is the primary reason for application denial. The system is designed to filter out non-compliant operators at each stage, saving administrative resources and enforcing the law effectively.

Why You Must Collect the 3.5% Tax Even if You Only Rent for 2 Weeks

The obligation to collect and remit the 3.5% Tax on Lodging (THT) is one of the most misunderstood aspects of Quebec’s STR laws. Many seasonal owners mistakenly believe this tax only applies to full-time operators or those exceeding a certain income threshold. This is incorrect. The law is absolute: if you offer an accommodation unit for rent for a period of 31 days or less in exchange for payment, you are legally required to register for, collect, and remit the THT to Revenu Québec. There is no minimum rental period or income level to trigger this obligation.

The financial consequences of non-compliance are severe and actively enforced. Between April 2023 and March 2024, Quebec imposed $5 million in fines to non-compliant short-term rental owners. These fines are not warnings; they are substantial penalties designed to ensure the system is respected. An audit by Revenu Québec that uncovers uncollected THT will result in you being liable for the back taxes, plus interest and significant penalties.

Furthermore, if your total annual rental revenues from all your properties exceed $30,000, you must also register for, collect, and remit the federal GST (5%) and provincial QST (9.975%). As a case from Quebec City illustrates, a host renting only in the summer months was required to complete quarterly tax filings for the THT, GST, and QST year-round, as the registration remains active. Forgetting to file a “nil” return during the off-season can trigger its own penalties. Tax compliance is not a seasonal activity; it is a year-round legal responsibility once you are registered.

Treating tax remittance as optional is the fastest way to attract the attention of Revenu Québec. Proper registration and diligent filing are non-negotiable components of operating a legal rental in the province.

The Mistake of Getting a CITQ Number Without Checking if Your Zone Allows Rentals

The single most critical and irreversible error a prospective host can make is to invest time and money into the CITQ registration process without first obtaining written confirmation that short-term rentals are permitted by their local municipality. A CITQ number is not a permit that overrides municipal by-laws; it is a provincial registration that is contingent on municipal approval. Possessing a valid CITQ number for a property in a non-authorized zone provides zero legal protection. In the event of an inspection or complaint, your operation will be deemed illegal, and both your CITQ registration and any investment made will be lost.

This is the core of the “operational sequence.” The municipality holds the ultimate authority on land use. Before you purchase insurance, take photos, or fill out a single CITQ form, your first and only action should be to contact your municipality’s urban planning department (service de l’urbanisme). You must ask one direct question: “Is short-term tourist accommodation permitted at this specific address and in this specific zone?”

As this visualization suggests, the process demands careful examination of official documents. Do not rely on verbal assurances or information from real estate agents. You must obtain a signed Notice of Compliance from the municipality. This document is your official proof that you have performed your due diligence and that your project conforms to local by-laws. It is a required document for the CITQ application itself. Without it, you cannot legally proceed. Some municipalities have further restrictions, such as minimum distances between rental properties or maximum occupancy limits, which you must also verify.

Think of it as building a house: you would never order windows and doors before confirming you have a building permit and a foundation. The municipal zoning authorization is your foundation. Without it, everything else is invalid.

Residential vs. Commercial Insurance: The Gap That Leaves You Uncovered During Rentals

A standard homeowner or cottage insurance policy is fundamentally designed to cover risks associated with residential use. The moment you accept payment from a guest, you are engaging in a commercial activity. This action typically voids key coverages in a standard residential policy, creating a massive liability gap. In the event of a guest injury, fire, or significant property damage during a rental period, your insurer would be within their rights to deny the claim entirely, leaving you personally exposed to devastating financial loss.

Quebec law is explicit on this matter. It does not merely suggest appropriate insurance; it mandates it. As the Airbnb Help Centre clarifies, this is a non-negotiable requirement. Their guidance is direct and aligned with provincial law:

The coverage afforded by standard homeowner policies does not satisfy Quebec’s requirement for tourist accommodation establishments to maintain $2,000,000 CAD civil liability insurance per claim.

– Airbnb Help Centre, Quebec Insurance Requirements for STR Hosts

This is not a recommendation; it is a legal prerequisite for registration. You must provide proof of this specific coverage to the CITQ. The only way to close this liability gap is to secure a policy specifically designed for short-term rental operations. Major Canadian insurers now offer solutions for this.

Relying on a residential policy is not a calculated risk; it is a guarantee of non-coverage when you need it most. Securing the correct commercial or endorsed policy is a mandatory step in your compliance sequence.

Noise Logs and Contact Info: How to Prove You Are a Responsible Operator

Compliance with Law 25 extends beyond initial registration. It requires you to actively operate and document your activities in a way that demonstrates you are a responsible host who mitigates neighbourhood disturbances. During an inspection or in the event of a complaint, your ability to produce clear, organized records is your primary line of defense. Word-of-mouth assurances are worthless; documented proof is everything. This is not about being a good neighbour; it is about building a defensible file that proves you are a professional operator.

Your responsibilities include proactive communication and meticulous record-keeping. You must provide a 24/7 contact number for a person who can respond to issues at the property promptly. This number should be given to neighbours and displayed at the property. All communications with neighbours, especially concerning complaints about noise or parking, must be documented in a formal incident log with dates, times, and resolutions. This log demonstrates that you have a system in place to manage issues professionally.

Furthermore, maintaining a complete guest register is not optional. You are required to keep a record of the names, contact information, and stay dates for all guests for a minimum of three years. This, along with bilingual house rules posted visibly at the entrance, establishes a framework of control and accountability. The market is maturing, and compliant operators are becoming the standard. In Quebec City, for example, it’s estimated that as of July 2025, 90% of the 1,415 listings in Quebec City have valid licenses, indicating that professionalism is now the norm, not the exception.

An inspector will not be interested in your intentions. They will ask for your guest register, your incident log, and proof of your tax filings. Having these documents organized and ready is the mark of a compliant and defensible operation.

Why That ‘Too Good to Be True’ Mont-Tremblant Chalet Is Likely a Scam

While much of the focus is on owner compliance, you must also be vigilant against fraudulent actors targeting you. The sophistication of rental scams is increasing, moving beyond fake listings to elaborate schemes designed to defraud legitimate owners. A common tactic is “calendar blocking,” where a scammer uses stolen credit card information to make fraudulent bookings for peak season dates. The booking holds your calendar, preventing legitimate guests from reserving, and is only revealed as fraudulent weeks later when the payment officially fails, by which time you have lost irreplaceable high-season revenue.

These are not isolated incidents. A Mont-Tremblant owner reported losing $8,000 in summer revenue to a series of such fraudulent bookings. The perpetrators often create a sense of urgency or propose an offer that seems slightly too generous to be true, luring the host into bypassing standard procedures. The cardinal rule of self-protection is to never accept payment outside the official booking platform. Any request to pay via Interac e-Transfer, wire, or other direct methods is a major red flag and is almost certainly a scam.

Your first line of defense is the booking platform itself. Enforce a strict policy of only accepting guests with verified profiles. Be wary of new profiles with no reviews or those who make unusually large or long bookings without asking any questions about the property. These are often signs of an automated or fraudulent account. Document all communications and report any suspicious activity to the platform immediately. Verifying the legitimacy of a listing is also now easier for everyone, as the Quebec government’s official directory allows anyone to check a CITQ number for validity.

Maintain a professional skepticism and adhere strictly to platform payment protocols. Your diligence in screening guests is the best protection for your investment.

Acquired Rights: How to Prove You Operated Before the By-law Change

Municipalities across Quebec are continuously updating their by-laws to manage the growth of short-term rentals. If a new, more restrictive by-law is passed in your area, you may be able to continue operating under the principle of “acquired rights” (droits acquis). However, this status is not automatic. The burden of proof rests entirely on you, the owner. You must be able to definitively prove, with dated, verifiable evidence, that you were legally operating your rental *before* the new by-law came into effect.

An inspector or municipal official will not accept your word for it. You need to assemble a comprehensive file of historical evidence. This is a forensic accounting of your past business activity. A sworn affidavit from a neighbour confirming you rented out your cottage in 2018 is helpful, but it is much stronger when supported by a tax return from that same year showing declared rental income. The more varied and official the documentation, the stronger your claim for acquired rights will be. According to the OACIQ, Quebec’s real estate self-regulatory body, proving this continuous, pre-existing use is essential to be grandfathered in under old rules.

Your evidence file should include a combination of the following, all predating the by-law change:

• Dated Online Listings: Screenshots from platforms like Vrbo, HomeAway, or even Kijiji, clearly showing the property was offered for rent with timestamps or archival data.
• Tax Returns: Previous years’ income tax returns filed with Revenu Québec that explicitly declare rental income from the property.
• Guest Records: Old rental contracts, booking confirmation emails, or payment receipts that establish a timeline of rental activity.
• Insurance Policies: Historical property insurance policies that show you carried specific coverage for short-term rentals.
• Utility Bills: A series of historical utility bills (e.g., Hydro-Québec) that show usage patterns consistent with a rental property, not just occasional personal use.

Begin compiling this evidence immediately if you believe you may qualify. Waiting until you are challenged by the municipality will be too late, as tracking down old records under pressure is significantly more difficult.

Obtaining a Corporation Permit for Rentals: When Do You Need One in Quebec?

As your rental operation grows, particularly when you acquire a second property or your income increases, the question of whether to operate as an individual or to incorporate becomes a critical strategic decision. Operating as a sole proprietor is administratively simpler, with income reported on your personal tax return. However, it leaves your personal assets—including your primary home—completely exposed to liability claims. Incorporation creates a “corporate veil,” a legal separation that protects your personal assets from business debts and lawsuits.

The decision to incorporate is typically driven by two factors: liability protection and tax optimization. In Quebec, personal income tax rates can climb as high as 53.31%, while the corporate tax rate is a much lower 26.5%. While setting up a corporation involves initial fees ($1,000-$2,000) and increased administrative burden (annual filings, separate tax returns), the long-term financial benefits can be substantial.

The following table outlines the fundamental differences. This is not legal or financial advice, but a framework for your discussion with a qualified Quebec accountant and lawyer.

A common guideline among Quebec accountants is to strongly consider incorporation when annual rental income consistently exceeds $50,000 or upon the acquisition of a second rental property. A case study of a Montreal investor with three properties generating $95,000 annually showed tax savings of $12,000 in the first year after incorporating. The structure also provided crucial asset protection when a guest injury claim arose. The decision is a trade-off between administrative complexity and financial/legal protection.

This is an advanced step in your journey as a property owner. Once your operation is fully compliant and generating stable income, scheduling a consultation with an accountant to model the financial implications of incorporation is the logical and responsible next step to protect and grow your investment.