Rental Property ROI Calculator Canada

What happens on sale

This calculator's own Canada assumptions default the selling-cost deduction to 4.5% of sale price — slightly below the page's own "roughly 5%" description, though close enough to be a reasonable planning range. On the tax side, two separate mechanics apply when you actually sell. First, the government cancelled the previously proposed increase to the capital gains inclusion rate that would have taken it from one-half to two-thirds on gains above C$250,000/year for individuals — so gains on a sale in 2026 are still taxed at the one-half inclusion rate this model assumes. Second, and separately, any capital cost allowance claimed over the hold doesn't just vanish: CRA requires you to add a recapture of CCA to income, or deduct a terminal loss, depending on whether the sale price is above or below the property's remaining undepreciated capital cost. Recapture is taxed as ordinary income, not at the capital-gains inclusion rate — a materially different bill than the capital-gain portion of the sale.

The mortgage rate you're modelling against

This calculator's own Canada default sets the investor mortgage rate field to 5.5% — its own assumption, not a market quote. As of mid-September 2026, the Bank of Canada's posted 5-year conventional mortgage rate sat at 6.09%, roughly six-tenths of a point above the model's default; using the default without checking your own quote will understate debt service, and therefore overstate every year of cash flow and the resulting IRR. It's also worth remembering that a 20%-or-more down payment puts an investment purchase into uninsured-mortgage territory, where OSFI requires lenders to qualify the borrower at the greater of the contract rate plus 2 points, or a 5.25% floor — a stress-test hurdle for approval, separate from (and usually higher than) the contract rate you'll actually pay and the rate you should be entering here.

Rent growth over a multi-year hold, rent control permitting

This model lets you set an assumed rent-growth rate across the hold, but that growth rate runs into a legal ceiling for any unit with a sitting tenant. Ontario's 2026 guideline caps most sitting-tenant increases at 2.1% without Landlord and Tenant Board approval; Manitoba's 2026 guideline is 1.8%. If your model assumes rent growth faster than the applicable provincial guideline, that growth can only actually materialize on tenant turnover — a new lease at a new market rent — not on renewal with the same tenant, and a multi-year hold with low turnover will fall short of the model's projection in exactly the years it assumed growth on a sitting lease.

If you model a short hold

The IRR this calculator returns assumes standard capital-gains treatment on the eventual sale. That assumption breaks if the hold is short: CRA's residential property flipping rule deems a property owned for less than 365 consecutive days before disposition to be fully taxable as business income — no capital gains treatment at all, and no principal residence exemption — for transactions from January 1, 2023 onward, with only narrow life-event exceptions. Run this model with a one- or two-year hold and it will still apply the standard capital-gains math on exit unless you manually account for the flipping rule yourself; the model doesn't know your intended hold length is short enough to trigger it.

Rent-control ceilings vary a lot by province — model your own, not Ontario's

The reviewed rent-growth section above covers Ontario's and Manitoba's guidelines. Three more provinces set rent-increase limits very differently, and one sets none at all. British Columbia's 2026 limit is 2.3%. Nova Scotia's cap is 5% per year, effective January 1, 2026, but it's a temporary regime under the Interim Residential Rental Increase Cap Act, scheduled to sunset December 31, 2027. Quebec has no fixed ceiling at all — the Tribunal administratif du logement instead runs landlord-proposed increases through a calculation grid that tenants can contest, with a new calculation method applying to lease-modification notices given on or after January 1, 2026. Alberta caps nothing: per Alberta's tenancy guidance, there is no limit on the amount a landlord may raise rent by, only a minimum 365-day gap between increases and required notice periods (12 tenancy weeks for week-to-week, 3 tenancy months for month-to-month, 90 days otherwise).

For a pro-forma that assumes multi-year rent growth, the province the property sits in changes whether that growth is a right you can rely on or an assumption you're making. A Quebec or Alberta model with steady 3–4% annual rent bumps is a bet on the market, not a ceiling being tested — an Ontario or BC model at the same growth rate would be modelling above the legal guideline for existing tenants and should instead reflect turnover-driven increases, which aren't guideline-capped.