Buying and selling a rental property: tenants, rent limits, short-term rentals and vacancy taxes

Selling with tenants: the tenancy comes with the property

When a rental property is sold, the buyer becomes the new landlord and the tenancy continues on the same terms. The security deposit (at most half a month's rent) becomes the new landlord's responsibility to return; deal with the transfer of deposits in the contract or the closing statement.

If the buyer, or a close family member, wants to live there: once all conditions of the sale are satisfied and the buyer asks in writing, the seller generates a Three Month Notice to End Tenancy for Purchaser's Use (RTB-32P) in the Residential Tenancy Branch web portal and serves it. The notice period has been three months since August 21, 2024; the tenant has 21 days to dispute it and receives compensation equal to one month's rent.

A close family member means a spouse, or a parent or child of the buyer or the spouse. They must move in within a reasonable period after the notice takes effect and live there for at least 12 months; otherwise, except in extenuating circumstances, 12 months' rent is owed to the tenant.

In a building with five or more rental units that is not strata-titled, or is strata-titled with one owner of every unit, a tenancy cannot be ended for personal occupancy; those buildings are covered on my multi-family and apartment buildings page.

Rent: up to 2.3% in 2026 and 2.2% in 2027

The province sets the maximum yearly increase for residential rent: 3.5% in 2024, 3% in 2025, 2.3% in 2026 and 2.2% in 2027. Rent can go up only once every 12 months, with three full months' notice on Form RTB-7.

So when you buy a tenanted property, work out the return on today's rent and that limit, not on market rent.

Short-term rentals: principal residence only in most cities of 10,000 or more

Since May 1, 2024, in municipalities of 10,000 people or more (Vancouver, Burnaby, Richmond and Surrey among them) and smaller neighbouring communities, short-term rentals are limited to the host's principal residence plus one secondary suite or accessory dwelling unit. Since May 1, 2025, hosts must also register with the provincial registry; bookings longer than 90 days are not covered.

So in those cities, a condo bought as an investment that is not your principal residence cannot be used as a short-term rental, and a strata can also ban short-term rentals.

Vacancy taxes: the speculation and vacancy tax, and Vancouver's Empty Homes Tax

Most of Greater Vancouver, the municipalities of the Capital Regional District (Greater Victoria) and cities such as Kelowna, Nanaimo and Kamloops are inside BC's speculation and vacancy tax area, and each person on title must declare separately by March 31 every year. If no exemption applies, Canadian citizens and permanent residents pay 1% from 2026; foreign owners and untaxed worldwide earners pay 3% for 2026 and 4% from 2027.

To qualify through a rental, tenants must occupy the home for at least six months of the year, in rentals of at least one month each, and tenants at arm's length need a written tenancy agreement under the Residential Tenancy Act.

In the City of Vancouver there is also the Empty Homes Tax: a home unoccupied for more than six months of the year counts as empty, and the rate for the 2025 reference year is 3% of assessed value. It is exempt if rented to an arm's-length tenant for at least six months of the year, in periods of 30 or more consecutive days.

Tax when you sell

Rental income and expenses are reported on Form T776. On a sale, the gain is generally a capital gain, and half of it is included in income; the proposed increase in the inclusion rate was cancelled on March 21, 2025. Capital cost allowance you claimed is recaptured, also on the T776; the building cannot produce a capital loss, though a terminal loss is possible.

Sell within 365 days and the gain is business income (the federal flipping rule covers rentals too); sell within 730 days and BC's home flipping tax also applies, at 20% within 365 days, falling to zero at 730 days.

I am not an accountant; bring yours in before you sell.

Two more checks before you buy: strata bylaws and who can buy

Strata: since November 24, 2022, a strata cannot ban owners from renting, though bylaws restricting short-term rentals are still allowed.

Foreign buyers: the federal ban currently runs to January 1, 2027 and covers houses with up to three units, and condo, semi-detached and rowhouse units; foreign buyers in Metro Vancouver and the Capital, Fraser Valley, Central Okanagan and Nanaimo regional districts also pay the 20% additional property transfer tax.

How I work on a rental property

Buying: every lease, the rents and the deposits first; the return worked out on today's rent and the rent limit; then the financing, where lenders count rental income in different ways (see my rental property mortgage page).

Selling: with tenants in place, a buyer can only carry on as landlord or move in under the rules above; if you want to move back in yourself, the notice is also three months (since June 18, 2025). Decide early whether to sell tenanted or vacant, and build any notice period into the completion date.

If I act on both the property and the financing, I tell you in writing, before you sign anything, which role I am in and how I am paid in each.

Common questions

Can I sell my rental property with the tenants in it?

Yes. The tenancy continues, the buyer becomes the new landlord and takes over responsibility for the deposit. A buyer who wants to move in must ask you in writing, once all conditions are met, to give three months' notice.

How much notice does a tenant get if the buyer wants to move in?

Three months (since August 21, 2024), generated as an RTB-32P in the RTB web portal. The tenant has 21 days to dispute it and receives compensation equal to one month's rent.

What happens if the buyer never moves in?

The buyer or close family member must move in within a reasonable period and stay at least 12 months; otherwise, except in extenuating circumstances, 12 months' rent is owed to the tenant.

How much can I raise the rent in 2026 and 2027?

Up to 2.3% in 2026 and 2.2% in 2027, once every 12 months, with three full months' notice on Form RTB-7.

Can I use an investment condo in Vancouver for Airbnb?

Generally not. Since May 1, 2024, in cities of 10,000 people or more such as Vancouver, short-term rentals are limited to the host's principal residence plus one suite or accessory unit, and hosts must register with the province; a strata can also ban them.

Do I pay the speculation and vacancy tax on a rental property?

Not if tenants occupy it for at least six months of the year, in rentals of at least a month each, under a written tenancy agreement; but each owner still declares by March 31. Otherwise, citizens and permanent residents pay 1% from 2026, and foreign owners 3% for 2026 and 4% from 2027.