Owning & renting

Renting Out a Condo in Toronto: Landlord Rules, Taxes and the Numbers (2026)

Toronto has more condo investors than almost any city in North America, and most of them learn the Residential Tenancies Act the expensive way. This guide covers the rules as they stand in late 2026 — including the changes that took effect on September 21, 2026 — the condo-corporation layer on top of them, and the arithmetic that decides whether a unit actually cash-flows.

Updated October 22, 2026 · TORE.ca editorial

1. 1.Before you list: mortgage, insurance, corporation

   • Mortgage: tell your lender. An owner-occupied mortgage converted to a rental is usually fine at renewal, but an insured mortgage (under 20% down) was approved on an occupancy promise — moving out within the first year can breach it. A purchase intended as a rental needs 20% down and is priced as a rental mortgage.
   • Insurance: your condo policy must become a landlord (rental) policy — liability, loss of rent, and your contents. Require the tenant to carry tenant insurance and name it in the lease.
   • Condo corporation: check the declaration and rules for minimum lease terms (many prohibit under 6 or 12 months), short-term rental bans, and the leasing notice you must file. Under the Condominium Act you must notify the corporation within 10 days of leasing (name of tenant, term, unit) and again when the lease ends. Corporations can fine or lien for unauthorized short-term rentals.
   • HST: a long-term residential rental is HST-exempt. If you bought new and are renting it out, you paid HST on closing and can claim the New Residential Rental Property Rebate within two years.

2. 2.The lease, the deposit and what you can ask for

   • Standard lease: Ontario requires the government’s Residential Tenancy Agreement (Standard Form of Lease) for every new residential tenancy since April 30, 2018. Attach your own clauses in an appendix; anything contradicting the RTA is void.
   • Deposit: you may collect a rent deposit equal to one rental period (last month’s rent) and nothing else — no damage deposit, no key deposit beyond the actual replacement cost of the key. The deposit must be applied to the last month and earns interest annually at the guideline rate (2.1% for 2026).
   • Screening: credit report, employment letter, references and ID are permitted. You cannot ask about or decide on protected grounds under the Ontario Human Rights Code (family status, receipt of public assistance, citizenship, and others), and you cannot require a guarantor or extra deposit because of them.
   • Post-dated cheques or automatic payments: you may offer them; you cannot require them.
   • Pets: "no pets" clauses are void under the RTA, except where a condo corporation’s declaration prohibits pets — in which case the corporation’s rule applies.
   • Term: a 12-month fixed term is standard; at the end it continues automatically month-to-month on the same terms. You cannot make a tenant sign a renewal or leave at term end.

3. 3.Rent control: the guideline, the 2018 exemption, and the 12-month rule

   For most units the rent you can charge a sitting tenant rises at most once every 12 months by the provincial guideline — 2.1% for 2026 (2.5% in 2025, 2024 and 2023). You must serve Form N1 at least 90 days before the increase takes effect. Between tenants, rent is uncontrolled: when a tenant leaves you set the new rent at market.

   The exemption that matters for condo investors: a unit first occupied for residential purposes after November 15, 2018 is exempt from the guideline. For those units — most towers registered since 2019 — you may increase rent by any amount for a sitting tenant, but still only once every 12 months, still with 90 days’ written notice on Form N1. Proof of first-occupancy date (occupancy permit or the first lease) is yours to keep.

   Above-guideline increases for rent-controlled units are possible through an LTB application (AGI) only for capital expenditures or extraordinary cost increases, capped at 3% a year above guideline for up to three years. Rarely worth it for a single condo.

4. 4.The N-forms: what you can and cannot do, including the September 2026 changes

   • N1 — Notice of Rent Increase: 90 days, once per 12 months, guideline unless exempt.
   • N4 — Non-payment of rent: served the day after rent is late. Since September 21, 2026 the termination date must be at least 7 days after service (it was 14). If the tenant pays in full before that date, the notice is void. If not, you file an L1 application with the LTB; the hearing and order take months.
   • N5 — Interference, damage or overcrowding: 20 days, with a 7-day cure period for a first notice.
   • N8 — Persistent late payment: 60 days; used alongside a pattern of N4s.
   • N12 — Landlord’s own use (you, your spouse, child, parent, or a caregiver moving in for at least a year): since September 21, 2026 there are two routes — 60 to 119 days’ notice with one month’s rent as compensation paid before the termination date, or at least 120 days’ notice with no compensation. The named person must take occupancy within 60 days of the termination date, and a tenant can claim bad faith (up to 12 months’ rent difference plus penalties) if they do not. An N12 for a purchaser’s own use — when you sell to someone who will live there — still requires compensation regardless of notice length.
   • N13 — Demolition, conversion or major repairs: 120 days; rarely relevant to a single condo.

   A notice is not an eviction. Only the LTB can order a tenant out, and only the Sheriff can enforce it. Changing locks, shutting off utilities or removing belongings is an offence under the RTA with fines up to $50,000 for an individual.

5. 5.When the tenant wants to leave

   • N9 — tenant’s notice: 60 days, ending on the last day of a rental period, and not before the end of a fixed term.
   • Assignment and subletting: a tenant may ask to assign the lease; you may refuse a specific assignee for cause but if you refuse to allow assignment at all, the tenant can leave on 30 days’ notice.
   • Standard lease not provided: if you did not use the standard form, the tenant can demand it and, if you do not deliver within 21 days, can terminate on 60 days’ notice at any time.
   • The deposit is applied to the last month; it is not a damage fund. Damage beyond normal wear is pursued through an L2 application (while the tenant is in possession) or the Small Claims Court / LTB after they leave.

6. 6.Short-term rentals (Airbnb) in Toronto

   Since January 1, 2021, Toronto allows short-term rentals (under 28 consecutive nights) only in the operator’s principal residence, registered with the City ($55 a year), with entire-home rentals capped at 180 nights a year, a 6% Municipal Accommodation Tax collected on every booking, and the registration number displayed in every listing. An investment condo you do not live in cannot legally be a short-term rental in Toronto, and platforms delist unregistered units. On top of the City rules, most condo corporations prohibit short-term rentals outright in their declaration or rules and enforce with fines and liens. The business case for a Toronto investment condo is a 12-month tenant.

7. 7.The numbers: does it cash-flow?

   A worked example at 2026 Toronto figures. One-bedroom-plus-den, 650 sq ft, downtown, bought for $650,000 with 20% down ($130,000). Mortgage $520,000 at 4.5% over 30 years: about $2,630 a month. Maintenance fee $650. Property tax about $390 a month (roughly 0.72% of assessed value). Insurance $40. Rent for that unit: roughly $2,500–$2,700 a month.

   • Monthly out: $2,630 + $650 + $390 + $40 = $3,710.
   • Monthly in: $2,600 (midpoint).
   • Monthly cash flow: about −$1,110 before vacancy, repairs or a property manager (typically 5–8% of rent).
   • Of the mortgage payment, roughly $680 in year one is principal — so the economic cost is nearer −$430 a month, with the rest building equity.

   That is the 2026 reality for a downtown condo bought at today’s prices with 20% down: negative cash flow, positive only through principal paydown and appreciation. The arithmetic improves with a larger down payment, a lower purchase price per square foot (older buildings, outer neighbourhoods), or a unit bought years ago at a lower cost base. Run it before you buy, not after.

8. 8.Taxes on rental income

   • Rental income is reported on Form T776 with your personal return. Deductible: mortgage interest (not principal), condo fees, property tax, insurance, utilities you pay, repairs, property management, advertising, legal and accounting fees, and the reasonable cost of travel to the unit.
   • Capital cost allowance (depreciation) on the building is optional — most advisors say do not claim it on a condo you may sell, because it is recaptured as income on sale and can affect the principal-residence exemption if you ever move in.
   • A net rental loss can offset other income, but CRA expects a reasonable expectation of profit; chronic losses on a single condo invite scrutiny.
   • When you sell: capital gain (50% inclusion) on the difference between sale price and adjusted cost base. If you owned it less than 365 days, the anti-flipping rule treats the profit as business income. If you ever lived in it, a change-in-use election (s.45) and the principal-residence designation for those years matter — get advice before changing use in either direction.
   • Non-resident owners: 25% of gross rent must be withheld and remitted monthly (NR4), or 25% of net rent with an NR6 election filed in advance. Toronto’s Vacant Home Tax (3% of assessed value) applies to any residential unit vacant more than six months in a year, including rentals between tenants beyond that threshold — declare occupancy every year.

Rules cited: Residential Tenancies Act, 2006 as amended by the Fighting Delays, Building Faster Act, 2025 (Bill 60) with changes in force September 21, 2026 per the Tribunals Ontario LTB operational update — N4 7-day termination period, N12 120-day no-compensation route, 60-day occupancy requirement; Ontario 2026 rent increase guideline (2.1%); RTA s.6.1 exemption for units first occupied after November 15, 2018; O. Reg. 9/18 (standard form of lease); RTA ss.105–106 (rent deposit and interest); Ontario Human Rights Code; Condominium Act, 1998 s.83 (leasing notice); City of Toronto Municipal Code Chapter 547 (short-term rentals) and Chapter 758 (Municipal Accommodation Tax); City of Toronto Vacant Home Tax (3%); Income Tax Act (T776, CCA, s.45 change in use, s.12(12) flipping rule, s.216/NR6 non-resident rentals); Excise Tax Act (New Residential Rental Property Rebate). Cash-flow example uses 2026 Toronto market figures and is illustrative.