A BC rental is taxed at every stage. There's transfer tax when you buy, property tax every July, income tax on the rent each spring, capital gains tax when you sell, and GST on the commission you pay to sell it. Each tax is easy to look up on its own. What's hard to see is the total, and how much of the property's return ends up with governments instead of you. The calculator follows one property through its whole life and adds it up.
The stack, in one example
The default example is a $699,000 two-bedroom Burnaby condo bought as a rental in 2026. It has 20% down, a 4.49% mortgage and rent of $2,850 a month. It's held for ten years at 2.5% annual price growth, by an owner earning $110,000 elsewhere, and sold for about $894,800.
| Tax | Over ten years |
|---|---|
| Property transfer tax on purchase | $11,980 |
| Property tax | $23,493 |
| Income tax on rental income (net of early-year refunds) | $6,801 |
| Capital gains tax on sale | $30,988 |
| GST and PST on commission and legal fees | $1,665 |
| Total | $74,927 |
Before any of those taxes, the property earns about $211,300 over the decade. That's rent after running costs, principal paid down, and the gain on sale. Taxes take about 35% of it, and the owner keeps about $136,300.
On the $153,580 of cash put in at the start, that's an annual after-tax return (IRR) of about 5.1%. Without the income and capital gains taxes, it would be about 6.2%.
Taxes when you buy
Property transfer tax, in full. Investors don't get the first-time buyer or newly built home exemptions, because both require you to live in the home. On $699,000 that's $11,980. It's added to your cost base, so it reduces the capital gain when you sell, but you pay it in cash on day one.
GST on new builds. A new unit bought from a builder carries 5% GST. The new residential rental property rebate phases out at $450,000, so it's worth nothing on most BC condos. Buying new as an investor means $35,000 or more of extra tax up front. In the default example, buying the same unit new cuts the after-tax profit from about $136,300 to about $109,000.
Foreign buyers. Most non-Canadians are barred from buying residential property by the federal ban until at least January 1, 2027. Those who can buy pay the additional 20% transfer tax in Metro Vancouver and other specified regions.
Sales tax on legal fees. Legal fees carry 5% GST and 7% PST.
Taxes while you hold
Property tax. Most Metro Vancouver cities charge roughly 0.28% to 0.35% of assessed value a year, including the school tax. A rental gets no Home Owner Grant. From 2027, Budget 2026 raises the additional school tax on homes assessed over $3 million.
Income tax on the rent. Rental profit is added to your other income and taxed at your marginal rate. You can deduct:
- mortgage interest (but not principal)
- property tax, strata fees and insurance
- repairs and maintenance
- property management and accounting
- depreciation, if you choose to claim it
A rental loss can be deducted against your other income.
Vacancy taxes, if it sits empty. A unit rented for at least six months of the year, in stays of 30 days or more, is exempt from BC's speculation and vacancy tax. It's also exempt from Vancouver's Empty Homes Tax if it's in the City. Leave it empty and a BC-resident owner of this condo would owe about $2,990 a year in SVT after the credit, plus about $21,000 more in EHT inside Vancouver.
Budget 2026's PST expansion. From October 1, 2026, PST applies to accounting and bookkeeping, and to property management and strata management for non-residential property. Residential rental management stays PST-free.
Negative cash flow, and the refund that softens it
At 2026 prices and rates, most Metro Vancouver condos don't cover their costs at 20% down. In the default example:
- Year one: rent after vacancy is about $33,500. Running costs are about $12,200, and mortgage payments about $37,100.
- Cash flow: about −$15,800, or −$1,315 a month.
- Break-even rent with 20% down is about $4,190 a month.
- Cap rate (net operating income over price) is about 3%.
Two things take the edge off.
- The tax refund. Most of that shortfall is principal, which is equity you keep. The taxable loss is much smaller, about $3,300 in year one, because principal isn't deductible. That produces a refund of about $1,000 against your employment income.
- Rising rent. As rent rises and interest falls, the taxable result turns positive around year four, and you start paying tax on rental profit while the cash flow is still negative.
That last point surprises people. You can owe tax on a property that costs you money every month, because the part of your mortgage payment that builds equity isn't deductible.
Taxes when you sell
Capital gains. Half of the gain is taxable, added to your income in the year the sale completes. Your cost base includes the purchase price, transfer tax, legal fees and capital improvements. In the example, a gain of about $152,600 creates about $31,000 of tax for someone earning $110,000. The whole taxable half lands on top of that year's income, which pushes part of it into higher brackets.
Recapture. Any depreciation you claimed comes back as fully taxable income, up to the amount claimed.
Sales tax on the sale. Commission carries 5% GST, which is about $1,340 on the example sale.
Short holds. Selling within 365 days makes the gain fully taxable business income under the federal flipping rule. Selling within 730 days can also trigger BC's home flipping tax. See the flipping tax calculator.
Should you claim depreciation?
Capital cost allowance lets you deduct 4% a year of the building's declining value. The first year is half, and the land isn't depreciable. It can reduce rental income to zero, but it can't create or increase a rental loss.
It lowers tax now and raises it later. When you sell, every dollar claimed comes back as fully taxable recapture, often in a year when the capital gain has already pushed you into a higher bracket.
In the default example, claiming CCA saves about $8,800 of income tax over ten years. It costs about $11,800 more at sale, so the owner ends up about $2,900 worse off.
CCA tends to pay off when you'll hold for a very long time, when your income will be lower in the year you sell, or when you'd use the savings to pay down debt faster. It rarely makes sense on a property you might move into later, because it rules out the principal residence election for the rental years. Tick the box to see your own numbers.
What the return really depends on
With cap rates around 3%, a Metro Vancouver condo's return depends mostly on price growth, and on holding long enough for transaction costs and taxes to be spread thin.
| Price growth per year | 5-year hold | 10-year hold | 15-year hold |
|---|---|---|---|
| 0% | −4.9% | −0.9% | 0.8% |
| 1% | −0.7% | 1.9% | 2.7% |
| 2.5% | 3.9% | 5.1% | 5.1% |
| 4% | 8.0% | 7.9% | 7.2% |
For comparison, Greater Vancouver's composite benchmark rose only about 7.7% in total over the ten years to June 2026. That's less than 1% a year, and it was a decade that began near a peak.
Nobody knows the next ten years. But the table is a fair warning. At a flat market, a leveraged condo bought at today's prices loses money after tax even over a decade. Our rent vs buy calculator runs the same question for a home you'd live in.
Personal, joint, or corporate ownership?
Personal ownership is the simplest for one or two properties. Losses offset your other income, gains get the 50% inclusion, and there's no corporate filing.
Joint ownership with a spouse can split rental income and gains between two sets of brackets. But the attribution rules can override a split if one spouse supplied all the money.
A corporation generally pays high corporate rates on rental income, part of which is refunded when dividends are paid. Rental losses stay trapped inside the company. Transferring a property you already own into a company can trigger tax and a second round of transfer tax.
For most individual BC landlords, the corporate route adds cost and complexity without saving tax. Get advice before choosing it.
Mistakes we see with investment properties
Judging the investment on cash flow alone. Principal paydown is return, and appreciation is most of the return. Price growth is the number to stress-test.
Forgetting that principal isn't deductible. You can owe tax on a property with negative cash flow.
Claiming CCA by default. Recapture often costs more than the deduction saved.
Leaving the unit empty between tenants for months. Over six months empty in a year triggers the SVT, and in Vancouver the EHT too.
Selling in a high-income year. The whole taxable gain stacks on top of that year's income. Consider timing the completion.
Buying new as an investor without pricing in the GST. It's 5% up front with no meaningful rebate.
Questions people ask us
What taxes do you pay on a rental property in BC?
Property transfer tax when you buy, plus 5% GST on a new build. Annual property tax, and income tax on net rental income. Capital gains tax and any depreciation recapture when you sell. GST on the selling commission, and GST and PST on legal fees. Vacancy taxes can apply if the unit isn't rented at least six months of the year.
Can I deduct mortgage payments on a rental?
Only the interest portion. Principal repayments aren't deductible, which is why a property can have negative cash flow but still show taxable rental income.
Can a rental loss reduce my income tax?
Yes. A rental loss can be deducted against your other income. On the default Burnaby condo it produces a refund of about $1,000 in the first year for someone earning $110,000.
Should I claim CCA on my rental property?
Often not. It reduces tax now, but the amount claimed is taxed in full as recapture when you sell. In the default example, claiming it leaves the owner about $2,900 worse off over ten years. It also can't create a rental loss.
How is the sale of a rental property taxed?
Half of the capital gain is added to your income in the year the sale completes, taxed at your marginal rates. Any depreciation claimed is recaptured as full income. Selling within a year makes the gain fully taxable business income, and selling within two years can trigger BC's home flipping tax.
Do rental properties get the Home Owner Grant?
No. The grant is only for an owner's principal residence, so a rental pays the full property tax.
Does the new PST on services apply to my property manager?
Not for residential rentals. From October 1, 2026, PST applies to property and strata management of non-residential property, and to accounting and bookkeeping services, so your accountant's fees will carry PST.
What return can I expect on a Vancouver rental condo?
With cap rates around 3% and 20% down, most of the return depends on price growth. In the default example, after-tax annual returns range from about −0.9% at 0% growth to about 7.9% at 4% growth over ten years.
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