Taxes, Tenants, and Timing: What Real Estate Investors Should Be Watching This Fall

Let’s be honest: when most investors think about taxes, their eyes glaze over. Spreadsheets, inclusion rates, municipal bylaws, not exactly Netflix binge material.

But here’s the secret: tax is the silent partner in every property deal you’ll ever do. It doesn’t sleep, it doesn’t forget, and it always takes its cut. The good news? If you play the game right, you can make that partner work for you, sometimes even tilt the deal in your favour.

This fall, a few things are bubbling up in Canadian tax policy that every investor should have on their radar. Some will make you breathe a sigh of relief, others could spark your next opportunity. Let’s break it down.

1. Capital Gains Drama: Cancelled (For Now)

Remember the panic last year when the federal government proposed bumping the capital gains inclusion rate from 50% to 66.7%? Investors were calling accountants at midnight, debating whether to dump properties before the hike.

Here’s the plot twist:

• It was deferred in early 2025.

• And then, in March 2025, Prime Minister Mark Carney’s government officially cancelled it.

Current status (August 2025): As of fall 2025, nothing’s changed. Sell a property today and only half your gain is taxable, just like before. The much-feared two-thirds inclusion rate? Off the table.

Investor takeaway: Don’t feel pressured into panic sales. If you rushed to sell last year, you may have outsmarted yourself, the CRA only taxes what’s actually law, not proposals. This is your chance to refocus: is it smarter to refinance, hold, or restructure instead of selling under pressure?

2. First-Time Buyer GST Rebate: A Rising Tide?

Ottawa has rolled out a new First-Time Home Buyers’ GST Rebate on new builds:

• 100% rebate (full GST refund) on homes up to $1M.

• Partial rebate on homes between $1M and $1.5M, phasing out to zero at $1.5M.

• No rebate above $1.5M.

But here’s the fine print:

• It’s only for first-time buyers who plan to live in the home.

• It applies only to new builds (from builders, co-ops, or owner-built). Resales don’t count.

• It’s a rebate, not an upfront exemption — either the builder applies it, or the buyer claims it from CRA.

• It’s separate from the older GST New Housing Rebate (still available for homes up to $450k).

Investor insight: You can’t claim it yourself, but your exit market just got a little juicier. That first-time buyer considering your condo assignment or brand-new rental under $1.5M? They could save up to $50,000. That kind of incentive makes buyers say “yes” faster.

3. Vacancy & Property Taxes: The Local Wildcards

   
   

Federal policy makes headlines, but city hall can hammer your bottom line, too.

• In Vancouver, the Empty Homes Tax is firmly at 3% of assessed value if a place sits empty for more than six months. (The city flirted with 5%, but rolled it back.) Miss your annual declaration? The city assumes your property’s vacant and sends the bill.

• In Toronto, the Vacant Home Tax started at 1%, but as of 2024 it’s tripled to 3%. That means an investor holding a $1M empty home in Toronto could owe $30,000, every single year it sits idle.

Investor reality check: Two duplexes at the same purchase price, one in Vancouver and one in Toronto, could deliver completely different cash flow thanks to these vacancy rules. And ignoring those annual declarations is an expensive mistake.

4. Assessment Appeals: The Overlooked Cash-Flow Hack

Here’s something unglamorous but powerful: challenging your property tax assessment.

• In Ontario, properties are still taxed on 2016 assessments (thanks to a nine-year freeze). That means some owners are paying too much, others too little. 

• Across the country, appeal deadlines vary. For example, Ontario appeals are due by March 31 each year.

Here’s the math: Knock $3,000 off your annual property taxes, and at a 5% cap rate, you’ve just created $60,000 in property value out of thin air.

But be smart: Not every appeal makes sense. If your property is under-assessed relative to neighbors, you could end up worse off. Always compare and bring evidence (recent sales, appraisals).

5. Structuring Smarter: Corps, Trusts & Partnerships

Entity structures are like tools in a toolbox: great when used properly, dangerous if misused:

• Corporations: Rental income is usually considered passive income, taxed at ~50%. You only get small business rates if you’re running a bona fide property management business with 5+ full-time employees. Otherwise, the real perks are liability protection and the ability to leave some cash inside for reinvestment.

• Trusts: Handy for estate planning and income splitting (with adult beneficiaries), but they now come with stricter annual reporting. Forget secrecy, CRA wants full transparency.

• Partnerships/LPs: Flexible for splitting income among investors, but allocations have to be genuine. Limited partnerships remain a favourite for larger syndications.

Compliance watch: Own residential property in a corp, trust, or partnership? You may have Underused Housing Tax (UHT) filing obligations even if you don’t owe tax. Missed filings mean $5,000–$10,000 penalties per property.

6. CRA Compliance & Timing Rules

The CRA has sharpened its focus on real estate. Two reminders:

• Flipping rule: Sell within 12 months of buying and your profit is 100% taxable as business income. No capital gains treatment, no principal residence exemption. Exceptions exist (death, divorce, relocation), but otherwise, flips are fully taxed.

• Rental reporting: CRA expects full reporting of rental income, including Airbnb/short-term rentals. Over-claiming personal expenses? That’s an audit risk.

Investor takeaway: Timing matters. The CRA doesn’t care about your midnight reno woes or flaky tenants, but it will care if you try to dress up a flip as a capital gain.

Final Thought: The CRA Doesn’t Care About Your Tenant Drama

Your tenant might ghost you, your contractor might vanish, and your furnace might quit on Christmas Eve, but the CRA? It doesn’t care. It doesn’t care What it does care about: returns filed on time, rental income reported accurately, and structures set up cleanly.

The investors who win aren’t just the ones who buy low and sell high, they’re the ones who treat tax as a strategy, not an afterthought.

So, before you chase your next deal, pause and ask:

• Have I appealed my assessments?

• Do I know how the GST rebate might shift my exit market?

• Am I compliant with vacancy declarations, UHT filings, and flipping rules?

• Is my structure set up for the long haul?

Get those right, and you’ll find that taxes aren’t just a headache, they’re one of the best wealth-building tools in your arsenal.

Your Turn

What’s your biggest tax frustration as a real estate investor right now? Hit reply and let me know, I might feature it (anonymously) in a future newsletter.

Smart investors know taxes aren’t just paperwork — they’re strategy. At Anker RETax, we help you structure, save, and stay compliant so you can focus on growing wealth. Book a consultation today.

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Disclaimer: This content is for general information only and shouldn’t be taken as tax, legal, or investment advice. Always check with a qualified professional before acting on these strategies.

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