What do I need to know about buying a rental property in Ontario?

Lenders usually want at least 20% down on a second property, since mortgage default insurance generally isn't available for a property you won't live in. Some lenders count a portion of expected rental income toward what you qualify for, but rules vary a lot by lender. You still face the mortgage stress test, qualifying at whichever is higher: 5.25% or your contract rate plus 2 percentage points (as of 2026).

Yes. Ontario land transfer tax applies the same brackets whether you'll live in the home or rent it out (as of 2026): 0.5% up to $55,000, 1.0% up to $250,000, 1.5% up to $400,000, 2.0% above that, and 2.5% above $2,000,000 for one or two-unit properties. The first-time buyer refund doesn't apply, since it requires you to occupy the home. See our closing costs page for more on what buyers pay.

Yes. Net rental income, what's left after mortgage interest, property tax, repairs, and other expenses, is taxed as regular income on your return. When you eventually sell, any gain is generally a capital gain, currently taxed on 50% of the gain, unless the flipping rule below applies. This gets complicated fast with multiple properties or partners, so talk to an accountant about your specific numbers. Your lawyer handles the closing, not your tax return.

If you sell a residential property, including a pre-construction assignment, less than 365 days after buying it, the CRA generally treats the entire gain as business income, fully taxable, with no 50% capital gains treatment and no principal residence exemption (as of 2026). A few exceptions exist, like death, divorce, or a job relocation. This rule was built specifically to catch short-term flips, so a quick resale needs tax advice before you list.

You take the property subject to the existing tenancy. Ontario's Residential Tenancies Act doesn't let a sale end a lease. The tenant keeps their unit, their rent, and their rights, and you become their landlord on closing. You can't evict a tenant just because you bought the building or want to move in a family member without following the Act's specific rules and notice periods, and even then it's not automatic. Ask your lawyer to get you a copy of the lease and any notices before you close.