Two Canada-specific rules change a BRRRR deal's real return beyond what the refinance math alone shows. First, the CRA treats rehab spending as either a deductible current expense or a capitalized addition to your building's CCA class (usually Class 1, 4% declining balance) depending on whether the work repairs or improves the property. Second, if the refinance falls through and you sell instead, holding the property under 365 days triggers the CRA residential property flipping rule: the gain is fully taxable as business income, with no capital-gains rate and no principal residence exemption.
Rehab spending: deduct now or depreciate over time
The R in BRRRR (rehab) doesn't get one uniform tax treatment. Per CRA's rental income guide, spending that restores a property to its original condition is generally a current expense, deductible against rental income in the year you spend it. Spending that improves the property beyond its original condition — the kind of work that actually moves an appraisal, which is most of what a BRRRR rehab budget is for — is a capital expenditure, added to the building's CCA class (Class 1 at 4% declining balance for most residential rental buildings, with a half-year rule limiting the first year's claim to half of net additions) and written off gradually rather than all at once.
That distinction matters for the year-one cash-flow picture this calculator can't see: a large rehab classified as capital doesn't produce an immediate write-off against your rental income the way the total dollar figure might suggest, and CCA claimed on the building also creates a recapture liability if you later sell for more than its remaining undepreciated capital cost. Confirm with a tax professional how your specific rehab items split between current and capital before assuming the full rehab budget offsets year-one income.
If the refinance falls through: the 365-day trap
BRRRR's whole thesis depends on the refinance actually closing at the assumed LTV and ARV. If it doesn't — the appraisal misses, the lender's underwriting changes, or rates move against you — and you decide to sell instead of holding, check the CRA residential property flipping rule before pricing that exit. A property owned for less than 365 consecutive days before disposition is deemed "flipped property," and the gain is fully taxable as business income — no capital gains rate, no principal residence exemption — for transactions on or after January 1, 2023. Life-event exceptions exist (death, relationship breakdown, job loss, and others), but a stalled refinance isn't one of them.
Lenders set their own seasoning period before refinancing against appraised value; a BRRRR project that has to sell before 365 days and then needs to pivot to a sale sits right at the edge of the 365-day line — model the tax difference between a capital-gains exit and a fully-taxable-as-business-income exit before treating "just sell it" as your fallback plan.
Qualifying the refinance mortgage
The refinance itself is a new, uninsured mortgage, and under OSFI's minimum qualifying rate rule it must qualify at the greater of your contract rate plus 2%, or a 5.25% floor — not the contract rate you'll actually pay. For rate context, the Bank of Canada's own data puts the chartered-bank prime lending rate at 4.45% as of mid-September 2026, while the posted 5-year conventional mortgage rate — a materially higher published reference rate, not a typical discounted rate — sat at 6.09% over the same weeks. Run your refi assumption at the stress-tested rate, not just your expected contract rate, before counting on a specific post-refi cash flow.
Methodology
This addition does not recompute the calculator's own BRRRR math (cash left in deal, refi loan amount, post-refi DSCR); it adds Canada-specific tax and qualifying-rate context sourced directly from CRA and OSFI publications, current as of 2026-09-21, plus current-week Bank of Canada rate observations.
Sources
- Canada Revenue Agency — Rental income (T4036), Capital Cost Allowance / current vs. capital expenses — accessed 2026-09-21
- Canada Revenue Agency — Residential Property Flipping Rule — accessed 2026-09-21
- OSFI — Minimum qualifying rate for uninsured mortgages — accessed 2026-09-21
- Bank of Canada — Valet API, Prime rate (V80691311) — accessed 2026-09-21
- Bank of Canada — Valet API, Conventional mortgage 5-year posted rate (V80691335) — accessed 2026-09-21