Do I need a tax review before turning my home into a rental?
Turning Your Home Into a Rental. Canadian tax guidance, practical records to gather and questions to resolve before preparing your return with Arsen Accounting.
Request a quote →Arsen Accounting Services · Prepared October 29, 2026
Rental income: 10 questions for property owners · Browse the 100-article collection
The direct answer
Yes. A change in use can create a deemed disposition at fair market value even without a sale. Special elections or exceptions may alter the result, and claiming capital cost allowance can affect available treatment. Decisions should be reviewed when the use changes, not first discovered years later when the property is sold.
Record the change when it happens
Keep the date the property began being used differently and information about its value at that time. Explain whether the whole home or only part changed use. A decision to rent can create tax issues before an eventual sale, so the preparer should hear about it in the relevant year rather than only when the property is disposed of.
Review elections before making assumptions
An election may be available in some circumstances, but it is not automatic and can have conditions and interactions with other claims. Give the preparer the home's use history, prior reporting and any depreciation claims. Do not assume calling the property a principal residence indefinitely removes the need for a change-of-use review.
What to gather before the review
- Dates and description of the change in use
- Support for value and original acquisition cost
- Prior elections, rental returns and depreciation records
Do I wait until I sell before mentioning the conversion?
No. Bring the change to the preparer's attention promptly. The relevant reporting and possible elections should be reviewed for the year of the change, not reconstructed only at sale time.
Your next step
Record the conversion date, obtain support for market value and preserve the original purchase and improvement records.
Related reading
Official sources
Sources checked for this collection on October 28–29, 2026. Annual forms may refer to a specific tax year. Use the rules and limits for the year being filed. General information; eligibility, elections and deadlines depend on the facts. No deduction or tax saving is guaranteed.
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