Published 2 November 2026 · By Jatin Dua, Broker of Record, RE/MAX Quantum Realty
When you sell an Ontario rental in 2027, half the capital gain is taxable and any depreciation (CCA) you claimed comes back as fully taxable recapture. In 2026 the effective Ontario rate on a gain ran from about 9.5% to 26.8%. GTA condo apartment prices were down 5.8% year over year in October 2026, so weigh timing against holding costs.
This guide is for Ontario landlords and investors, from one-condo owners in Toronto to owners of houses across the GTA, who are deciding whether to sell a rental property in 2027. You will get the market numbers, the taxes that apply (capital gains and depreciation recapture), the timing choices, and the tenant rules that affect a sale, as of November 2026. I am a broker, not an accountant or lawyer, so confirm the tax and legal points with yours.
Should I sell my investment property in 2027?
There is no single right answer, but the facts on the ground are clear:
- Prices are lower than a year ago. GTA condo apartment sales were down 10.4% and the average condo apartment price was down 5.8% in October 2026 compared with October 2025, according to TRREB’s Market Watch. The average GTA condo apartment price that month was $621,400.
- Borrowing costs went up. The Bank of Canada raised its policy rate to 2.50% on 28 October 2026, its first hike in more than three years, and the big banks’ prime rate rose to 4.70%. The next rate decision is 9 December 2026.
- Buyers have time. TRREB says buyers have had substantial negotiating power over the past year.
Good reasons to sell are usually personal: the property does not cash flow at your renewal rate, you need the equity, a large repair is coming, or you want to simplify. Selling only because prices have dipped can lock in a lower result. The rest of this guide is about making the sale work if you decide to go ahead.
What do GTA investment condos sell for in 2026?
Condo apartments are where most small GTA investors are, so here are the 2026 numbers by area.
| Area | Condo apt median, Jan–Oct 2026 | Change vs 2025 | Sales, Jan–Oct 2026 | Avg days on market |
|---|---|---|---|---|
| Toronto C01 (downtown) | $600,000 | −6.6% | 2,138 | 37 |
| Toronto C08 (downtown) | $565,000 | −7.4% | 1,257 | 38 |
| Toronto C15 (North York) | $526,750 | −6.8% | 530 | 39 |
| Toronto W08 (Etobicoke) | $525,000 | −8.7% | 507 | 38 |
| Mississauga | $485,000 | −9.3% | 1,213 | 42 |
| Vaughan | $530,000 | −10.9% | 664 | 42 |
| Markham | $558,000 | −13.2% | 582 | 39 |
| Brampton | $415,000 | −12.6% | 241 | 53 |
Source: TRREB MLS data via REALM, January–October 2026 vs the same period of 2025. Municipal or Toronto district medians, not building or neighbourhood figures.
Detached homes held up better than condos in most places, but medians still fell in nearly every GTA municipality. If you bought a pre-construction condo that closed recently, check your numbers carefully before you list: your gain may be small, or a loss.
What taxes do I pay when I sell a rental property in Ontario?
There is no special Ontario tax on selling a rental. You may owe federal and Ontario income tax on up to three things:
- Capital gain. The selling price minus your adjusted cost base and selling costs. Half of the gain is taxable. The proposed increase to two-thirds was cancelled in March 2025, and Budget 2026 still describes the one-half rate.
- Recapture of capital cost allowance (CCA). If you claimed depreciation on the building, the CRA adds it back to your income when you sell for more than the building’s remaining tax value. Recapture is taxed in full, not at half.
- Business income, if you flipped. A housing unit owned for less than 365 days is generally taxed as business income under the residential flipping rule, with exceptions for certain life events.
Ontario’s land transfer tax is paid by the buyer, not the seller. My guide on whether you pay land transfer tax when you sell explains the exceptions.
What is CCA recapture, and how is it taxed?
CCA lets you deduct part of a rental building’s cost each year. Most rental buildings bought after 1987 are Class 1, at 4% a year on the declining balance. Land is never depreciable. In the year you buy, you can usually claim only half the normal amount, and you cannot use CCA to create or increase a rental loss.
The deduction lowers your tax while you own the property, but you pay it back when you sell. Here is an illustrative example:
| Line | Example |
|---|---|
| Total cost in 2016, including purchase costs | $465,000 |
| Part of the cost allocated to the building | $300,000 |
| CCA claimed 2016 to 2026 | $60,000 |
| Net selling price in 2027, after selling costs | $560,000 |
| Recapture (fully taxable) | $60,000 |
| Capital gain: $560,000 − $465,000 | $95,000 |
| Taxable capital gain (one-half) | $47,500 |
| Total added to 2027 income | $107,500 |
Illustrative numbers only. Rules from CRA Guide T4036, Rental Income, and Guide T4037, Capital Gains. Assumes the building’s share of the sale price is at least its $300,000 cost. The split between land and building, and the exact recapture, depend on your records.
If the building sells for less than its remaining tax value and it is the last property in its class, you may have a terminal loss, which is deductible. The CRA says you cannot have a capital loss on depreciable property, and special rules apply to how the price is split between land and building when the building is sold at a loss. My guide to rental income tax and Form T776 covers CCA in more depth.
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How can I lower the tax when I sell a rental property?
These are the legitimate levers I see accountants use with my clients:
- Prove your full cost base. Land transfer tax, legal fees on the purchase, and capital improvements (a new roof, windows, a renovation that improved the unit beyond its original state) all raise your cost base and lower the gain. Keep receipts.
- Deduct selling costs. Commission and legal fees on the sale reduce your proceeds.
- Choose the tax year. If your income will be lower in 2027 than in 2026, a closing in January rather than December may put the gain in a lower bracket.
- Use a capital gains reserve if you are paid over time. If part of the price is paid in later years, for example through a vendor take-back mortgage, the CRA generally lets you spread the gain over up to five years.
- Use capital losses you already have. Net capital losses from earlier years can offset capital gains.
- Check principal residence years. If you lived in the property at some point, some years may be sheltered.
Each of these depends on your records and your other income, so have your accountant model them before you sign.
Is it better to sell a rental in 2026 or 2027?
For tax, the question is which year the sale lands in. Your accountant will confirm the exact date that counts, which is usually tied to closing. A 2026 closing is reported on your 2026 return, due 30 April 2027. A 2027 closing is reported on your 2027 return. Budget 2026 proposes moving the filing and payment date for individuals to 15 May, starting with the 2027 tax year, but that still needs legislation.
Two other points for 2027:
- Instalments. A large gain can mean you must pay instalments the following year if your net tax owing tops $3,000. Budget 2026 proposes raising that threshold to $7,500 from 2028.
- Brackets. In 2026 the combined federal and Ontario rate on a capital gain is about 21.70% of the gain at $117,045 to $150,000 of income and 26.76% above $258,482 (TaxTips.ca). The 2027 brackets will be indexed and published later.
On market timing, TRREB’s October report noted that monthly sales and new listings, seasonally adjusted, were up from September. That is one month of data, not a trend. In my experience, spring brings more buyers, but it also brings more competing listings.
Can I sell a rental property with tenants in Ontario?
Yes. A sale does not end a tenancy. The tenant stays on the same terms unless the tenancy is ended properly under the Residential Tenancies Act. Your main options:
- Sell with the tenant in place to another investor. This is often simplest when the rent is at market and the tenant is reliable.
- Sell to a buyer who will live there. If the building has three units or fewer, or it is a condo unit, and the buyer (or the buyer’s spouse, child, parent, or certain caregivers) in good faith needs it for their own use, you can give notice on the buyer’s behalf after an agreement of purchase and sale is signed. The notice must give at least 60 days and end on the last day of a rental period or at the end of a fixed term. You, the seller, must pay the tenant one month’s rent or offer another acceptable unit.
- Agree with the tenant to end the tenancy, sometimes with a payment. My guide to the N11 and cash for keys explains how that works.
For showings, you or a registered salesperson you authorize in writing can enter with at least 24 hours’ written notice, stating the reason, the day and a time between 8 a.m. and 8 p.m. My guide to selling a home with a tenant in Ontario goes further.
If you are a non-resident of Canada, the buyer must generally hold back 25% of the price, or 50% on depreciable property such as a rental building, unless you get a CRA clearance certificate. Budget 2026 proposes lower withholding rates for some non-resident sellers on sales from 1 January 2027, but that is not law yet. Start the clearance certificate process early; see my guide to section 116 for non-resident sellers.
Before you decide, put three numbers side by side: what the property would sell for today after costs, your after-tax result including recapture, and what it costs you to keep it for another year at your renewal rate. If keeping it only works because you expect prices to rise, be honest about that. I would rather help a client hold a good tenant and a fixed-rate mortgage another year than sell into a weak month. When it is time to sell, a clean file (lease, rent ledger, receipts, status certificate for a condo) gets a better price.
What to do next
- Get a current value with the estimator above, then a full market review for your building or street.
- Ask your accountant for your adjusted cost base, total CCA claimed and an estimate of tax for a December versus January closing.
- Pull together the lease, rent ledger, receipts for improvements and, for a condo, a recent status certificate.
- Decide whether to sell with the tenant in place or to an owner-occupier, and plan the notice and timing.
- If you live outside Canada, start the CRA clearance certificate process before you list.
Need help with this? Talk to me.
I’m Jatin Dua, Broker of Record at RE/MAX Quantum Realty, and I’m the best agent to do this kind of work for you in Toronto and across the GTA. Over $100 million in GTA sales and 100+ families helped sell. Feel free to contact me any time: call or text 833-330-1925 or email [email protected].
Frequently asked questions
Is 2027 a good time to sell a rental property in the GTA?
It depends on your cash flow, renewal rate and plans, not on headlines. In October 2026, GTA condo apartment prices were down 5.8% from a year earlier and the Bank of Canada had raised its rate to 2.50%. Selling can make sense if the property no longer covers its costs or you need the equity. Compare your after-tax sale result with the cost of holding another year.
How much tax do I pay when I sell a rental property in Ontario?
In Ontario, half of the capital gain on a rental property is added to your income, so the 2026 effective rate is about 9.5% to 26.8% of the gain, depending on your bracket. Any depreciation (CCA) you claimed is also added back in full as recapture. There is no separate Ontario sale tax, and the buyer pays land transfer tax.
What is recapture of depreciation on a rental property in Canada?
Recapture is the capital cost allowance you claimed on a rental building that the CRA adds back to your income when you sell for more than the building’s remaining tax value. It is taxed in full, unlike a capital gain, which is taxed at one-half. If the building sells for less than that value, a terminal loss may apply instead.
Can I avoid capital gains tax on a rental property in Canada?
Not legally, unless some years qualify for the principal residence exemption because you lived there. You can reduce the tax by proving your full cost base, deducting selling costs, choosing the tax year of the sale, using capital losses, and claiming a reserve when the price is paid over several years. Confirm your plan with an accountant.
Do I have to pay tax on a rental property sold within a year in Canada?
Yes, and more of it. Since 2023, profit on a housing unit owned for less than 365 consecutive days is generally taxed as business income, fully taxable, under the residential flipping rule. Exceptions apply when the sale is caused by events such as death, separation, serious illness, job loss, an eligible relocation, insolvency or expropriation.
Can I sell my rental property with a tenant in Ontario?
Yes. In Ontario, a sale does not end the tenancy. You can sell to an investor who keeps the tenant, or, for a condo unit or a building of three units or fewer, give at least 60 days’ notice on behalf of a buyer who will live there, and pay the tenant one month’s rent. You can also agree with the tenant to end the tenancy.
How much notice does a landlord need to show a rental unit to buyers in Ontario?
At least 24 hours’ written notice. Under Ontario’s Residential Tenancies Act, a landlord, or a registered real estate salesperson authorized in writing, can enter to show the unit to a potential buyer if the notice states the reason, the day and a time between 8 a.m. and 8 p.m.
When is tax due if I sell my rental property in 2027?
Under current law, tax on a 2027 sale is due by 30 April 2028 with your 2027 return. Budget 2026, tabled 5 November 2026, proposes a 15 May filing and payment date for individuals from the 2027 tax year, but that needs legislation. A large gain can also require instalment payments in the following year.
What do non-residents pay when selling a rental property in Canada?
Non-residents pay Canadian tax on the gain, and the buyer must generally withhold 25% of the price, or 50% for depreciable property like a rental building, unless the seller gets a CRA clearance certificate. Budget 2026 proposes lower withholding rates for some non-resident sellers on sales from 1 January 2027, which is not law yet.
Sources
- Canada Revenue Agency: Guide T4036, Rental Income 2025 (CCA, recapture, terminal loss)
- Canada Revenue Agency: Guide T4037, Capital Gains 2025
- Canada Revenue Agency: Residential property flipping rule
- Budget 2026: Tax measures, supplementary information (filing date, instalments, section 116)
- TRREB Market Watch, October 2026
- Ontario: Residential Tenancies Act, 2006 (ss. 27, 49, 49.1)
- TaxTips.ca: 2026 combined federal and Ontario tax rates
- Prime Minister of Canada: Capital gains tax increase cancelled (21 March 2025)
Related reading
- Average Property Tax in Toronto for 2027: Per Year, Per Month, by Home Value
- Toronto Property Tax Due Dates and Payment Options Explained
- GTA Property Tax Rates Compared: Toronto, Mississauga, Brampton, Vaughan and More
- Property Tax on Vacant Land in Ontario: How It Works
About the author — Jatin Dua, Toronto and GTA real estate broker
I am Jatin Dua, Broker of Record and co-founder of RE/MAX Quantum Realty Inc., Brokerage, Unit 101, 799 The Queensway, Toronto. I work with buyers and sellers across Toronto and the GTA and have helped more than 100 families sell. Four-plus years of active GTA transactions and over $100 million in sales volume.
Reach me at [email protected] or 833-330-1925, or book a call.
More from the library
- How Much Will I Walk Away With Selling My Condo in Ontario? A Line-by-Line Breakdown
- Land Transfer Tax Between Family Members in Ontario: What Is Exempt
- Estate Administration Tax in Ontario: What You Pay
- Ontario representation agreements: there is no maximum term, and no statutory holdover
- Top 5 Condo Buildings to Rent in Birch Cliff and the Scarborough Bluffs, Scarborough, Toronto (2026)
- Aquavista at Bayside, 1 Edgewater Dr: Lakefront Mid-Rise With a Pool
How this estimate is produced
The estimate blends recent selling prices for comparable units in the area with the details you entered: size, bedrooms, floor, exposure, parking, locker and condition. It is a statistical estimate, not an appraisal and not a formal opinion of value.
What it cannot see
- Interior condition and upgrades beyond what you told it
- Unit-specific issues: noise, an obstructed view, a pending special assessment
- Your reserve fund and where the maintenance fee is heading
- What is competing with you in your own building right now
What moves the number most
- Floor and exposure, which can separate otherwise identical units
- Parking and locker, each priced separately by buyers
- Kitchen and bathroom condition
- Maintenance fee per square foot against the rest of the building
Treat it as a range, not a price
A single figure to the dollar would be false precision. Use the estimate to decide whether a move is worth exploring. Before you price anything for the market, the number needs checking against what is actually selling and sitting in your building this month, and that takes a person. I will do that for you at no cost and with no obligation.
Market data is sourced from the Toronto Regional Real Estate Board. Information is deemed reliable but is not guaranteed. This tool does not provide an appraisal or a formal opinion of value, and it is not a substitute for advice on your specific property. Jatin Dua, Broker of Record, RE/MAX Quantum Realty.
