Accounting & Tax Services for Real Estate Investors & Landlords in Canada

Canadian real estate tax has changed dramatically

The last five years have seen more change to Canadian real estate taxation than the previous twenty: the 2023 anti-flipping rule (property sold within 365 days is automatically business income, not capital gain); the Underused Housing Tax (UHT) requiring annual filings from many residential property owners; mandatory principal residence reporting on Schedule 3 and Form T2091; tightened scrutiny on pre-construction assignments; the BC Speculation and Vacancy Tax; the BC Foreign Buyers' Tax; the Ontario Non-Resident Speculation Tax; the Toronto Vacant Home Tax; and continued CRA focus on real estate audits.

For investors with multiple properties, real estate is also the area where structural decisions have the biggest long-term tax consequences. Whether a property is held personally, in a corporation, in a partnership, in a trust, in a joint venture, or with a bare trustee changes the tax outcome significantly. Most of those decisions cannot be cost-effectively unwound years later.

Who we serve

• Single-property landlords with one rental in addition to a principal residence
• Multi-property residential investors with portfolios of 2 to 50+ rental units
• Commercial real estate investors with office, retail, or industrial property
• Short-term rental operators (Airbnb, VRBO, cottage rentals)
• Flippers generating business income on residential or commercial property
• Developers with inventory accounting and HST New Housing considerations
• Pre-construction assignment sellers
• Real estate professionals as investors (realtors who also invest, mortgage brokers who also invest)
• Joint ventures and partnerships requiring T5013 partnership returns
• US property owners with cross-border filing implications

T776 — the Statement of Real Estate Rentals

Every Canadian rental property generates income that must be reported on Form T776 as part of the owner's personal T1 return (or the corporate T2 if held in a corporation). T776 requires per-property reporting of gross rental income, allowable operating expenses (utilities, repairs, property taxes, insurance, property management, advertising, mortgage interest, professional fees), capital cost allowance (optional), and the resulting net income or loss. The CCA decision is critical and irreversible in its consequences: claiming CCA reduces current tax but creates recapture on disposition.

The 2023 anti-flipping rule

Effective January 1, 2023, residential real estate sold within 365 days of acquisition is automatically treated as business income (100% taxable) rather than capital gain (50% inclusion rate). The rule applies regardless of intention. The exceptions are limited to enumerated life events: death, household addition, breakdown of marriage or common-law partnership, threat to personal safety, serious illness or disability, eligible relocation (40 km+ for new employment), involuntary termination of employment, insolvency, or destruction of the property. The seller must affirmatively claim the exception with documentation. Without an exception, the entire gain is fully taxable business income with no principal residence exemption available.

Underused Housing Tax (UHT)

The federal UHT is a 1% annual tax on the value of underused residential property owned by non-resident, non-Canadian persons. The filing obligation is much broader than the tax obligation: many Canadian-resident corporations, partnerships, and trusts holding residential property are required to file the annual UHT-2900 return even when no tax is owing. Penalties for failing to file start at $5,000 for individuals and $10,000 for corporations per property per year. We file UHT returns for all affected clients.

Provincial overlays

• BC Speculation and Vacancy Tax. Every BC residential property owner in designated areas must file an annual declaration even when no tax is owing.
• BC Property Transfer Tax. Including the foreign buyer's additional 20% in Metro Vancouver and certain regions.
• Ontario Non-Resident Speculation Tax. 25% on certain residential purchases by non-residents.
• Toronto Vacant Home Tax. Annual declaration required for every Toronto residential property owner.
• City of Vancouver Empty Homes Tax. Similar annual declaration in Vancouver.

HST and real estate

New residential housing is generally HST taxable in HST provinces (Ontario and Atlantic Canada) or GST taxable in GST-only provinces. The HST New Housing Rebate (form GST190 / RC7190 in HST provinces) and the HST New Residential Rental Property Rebate (form GST524 / RC7524) recover much of the federal portion when the property meets eligibility criteria. Assignment sales of pre-construction units are now generally taxable from May 2022 onward. Commercial real estate is generally HST taxable on sale (election possibilities apply).

Principal residence — not automatic

Since 2016, every disposition of a principal residence must be reported on Schedule 3 and Form T2091, even when fully exempt from tax. Failing to report can disqualify the exemption. We document principal residence designations carefully, especially for taxpayers who own more than one home in the same year (cottage owners, transitional periods).

Structural decisions — personal vs corporation vs partnership vs trust

The right ownership structure depends on the property type (residential rental vs flip vs commercial), the income level, the investor's other income, future capital gains expectations, succession plans, creditor protection needs, and tax treaty considerations for non-residents. We model the alternatives and recommend a structure based on the specific facts. Common structures:

• Personal ownership. Simplest. Best for single-property landlords and most short-term holds.
• Canadian corporation. Best for active flipping and development businesses claiming the small business deduction. Generally less efficient for long-term rental property because rental income is passive and the corporation pays high-rate refundable tax.
• Partnership. Useful for joint ventures with unrelated investors.
• Bare trust (nominee). Provides anonymity and operational flexibility while keeping beneficial ownership on the underlying T1 return.
• Family trust. Useful for estate planning and (post-TOSI) limited income splitting.

What Canadian businesses commonly miss about this service

Across the hundreds of Canadian businesses we work with, the same handful of issues come up repeatedly. Many small business owners delay engaging professional accounting until a crisis: a CRA review letter, an unfiled GST/HST return demand, a denied bank loan because financial statements aren't ready, or a Notice of Reassessment that arrived weeks ago. By the time we are first contacted, the cost to fix the problem is often several times what proper ongoing accounting would have cost from the start. Proactive engagement is dramatically cheaper than reactive cleanup.

The Canadian tax landscape also changes constantly. Recent changes that affect most Canadian taxpayers include the 2023 anti-flipping rule (residential real estate sold within 365 days is automatically business income, not capital gain); the Underused Housing Tax (UHT-2900 annual filing requirement for many corporations, partnerships, and trusts holding residential property even when no tax is owing — with $5,000 to $10,000 per-property failure-to-file penalties); the Quebec QST joint registration changes since 2021; the post-2018 Tax on Split Income (TOSI) rules that effectively eliminated casual income splitting through family dividends; the post-2021 $200,000 stock option vesting limit on the 50% deduction for options granted by non-CCPCs; the CSRS 4200 Compilation Engagement standard replacing the older Notice to Reader engagement; and ongoing CRA increased scrutiny on pre-construction assignments, short-term rental businesses, and cash businesses.

How BOMCAS Canada delivers this service

Every engagement begins with a written, fixed-fee engagement letter signed before any work is performed. The engagement letter describes exactly what is in scope, what deliverables you will receive, when those deliverables are due, what your monthly or project fee is, and what (if anything) is outside scope. This eliminates the hourly-billing surprise that most accounting clients fear. The only time we use hourly billing is for genuinely unpredictable items such as CRA audit response or complex one-off projects — and even then we agree to a maximum cap before starting.

Once the engagement letter is signed, you e-sign the CRA authorization (RC59 for businesses or AUT-01 for individuals), and we onboard you to the encrypted client portal with multi-factor authentication. All document exchange flows through the portal — no emailing of sensitive financial documents. Meetings happen by video conference or phone at times that work for you, including outside normal business hours when needed.

Our Canadian tax compliance philosophy

BOMCAS Canada is structured around four operating principles:

1. Tell the truth. If a tax position is aggressive, we say so. If a deduction will not survive a CRA review, we say so. If the engagement is going to cost more than originally quoted because the scope changed, we say so before doing the work.
2. Bill what we said we would bill. No surprise invoices. No scope-creep billing. If something legitimately changes scope, we discuss it and re-quote before doing the additional work.
3. Answer the phone. One-business-day response standard on client communications during normal business hours. No voicemail backlogs.
4. Specialize. Canadian tax and accounting is too complex to be a generalist. We do not do US-only tax, UK tax, or any other foreign jurisdiction in isolation. We are Canadian. Our cross-border work is always anchored by deep Canadian compliance.

What ongoing engagement with BOMCAS Canada looks like

For most clients, the ongoing relationship is structured around predictable monthly deliverables. For an incorporated small business client, that typically includes: monthly cloud bookkeeping with full bank and credit card reconciliation; quarterly or annual GST/HST returns prepared and filed; monthly payroll for owner-managers and any employees, with CRA source deduction remittances; year-end Compilation Engagement (CSRS 4200) financial statements; T2 corporate income tax return; owner-manager T1 personal tax return (and spouse where applicable); annual salary-vs-dividend optimization with written recommendation; unlimited email and phone support during business hours; one quarterly check-in call to review numbers and discuss the business; and CRA correspondence handling for routine review letters.

For a personal tax client, the ongoing engagement includes: annual T1 preparation; any required Quebec TP-1 (for Quebec residents); CRA pre-assessment and post-assessment review response when CRA requests additional documentation; Notice of Assessment reconciliation; and proactive tax planning conversations during the year about RRSP, TFSA, and FHSA contributions, major life events (marriage, kids, retirement, real estate), and any planned business or investment changes.

Frequently asked questions about engaging BOMCAS Canada

Why Canadian businesses choose specialized accounting over generalist accounting

The Canadian tax and accounting landscape has become significantly more complex over the past decade. The 2018 TOSI rules, the 2021 changes to stock option taxation, the 2022 mandatory reporting changes for trusts, the 2023 anti-flipping rule, the Underused Housing Tax, the changes to the small business deduction phase-out for passive investment income, the new CSRS 4200 Compilation Engagement standard, the continued expansion of digital sales tax rules, and the ongoing post-COVID CRA focus on cash businesses and unreported income have all required accountants to specialize more deeply. A generalist firm trying to cover personal tax, corporate tax, US tax, real estate, trusts, cross-border, and every industry vertical inevitably falls behind on the depth of expertise that any one client needs.

BOMCAS Canada is structured deliberately to maintain depth: we are Canadian-only by design; we work in industries where we have genuine specialized experience; we maintain ongoing professional education in Canadian tax law; we use Canadian-experienced staff at every level; and we coordinate with specialized partners (US-licensed cross-border, legal counsel for corporate restructuring, audit-engagement licensed practitioners) where required rather than trying to handle everything in-house.

Talk to a Canadian accountant who knows your industry

Call 780-667-5250 or submit the contact form. We respond within one business day.

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