For most people, moving has come with an assumption built in. You sell the home you’re leaving and put the proceeds toward the one you’re buying. The only real question is what it will sell for.
This year, more owners are asking a different question: should I sell it at all, or keep it and rent it out?
It’s a fair question, and the answer isn’t obvious. Keeping the home can turn it into an income property and let you wait for a better market. It also makes you a landlord, starts a tax window, and adds work that never shows up on a spreadsheet.
I sell homes, and I also place tenants and work with landlords through their tenancies, so I see this decision from both sides. Here’s how I’d think it through in Toronto.
Why the Question Is Real This Year
Start with prices. Across the GTA, the average selling price in September was $1,006,409, down 5.1% from a year earlier. On a like-for-like basis, the MLS Home Price Index was down 4.7%, and sales were down 9% as buyers held back. For anyone who bought in the last few years, that can mean selling for less than they hoped, or less than they paid. Holding the home and renting it out looks like a way to wait for prices to recover.
Then the mortgage. About one in eight outstanding mortgages are pandemic-era five-year fixed terms renewing over the next year, and the Bank of Canada expects those payments to rise by about 15%. You’ll face today’s rates either way, but if you hold, the renewed payment becomes part of what you’re asking a tenant to cover.
And that tenant is paying less than a year ago. Asking rents across Canada were down 4.8% year over year in August, as a record number of new apartments comes onto the market.
So holding is a bet on prices recovering, with rent covering less of the cost than it used to. That doesn’t make it the wrong choice. It makes it one worth running properly, with real numbers, before you list.
Condo or House? Two Very Different Decisions
In this city, the decision looks completely different for a condo than for a house, because the two are in very different markets right now, on both the sale side and the rent side.
If you own a condo, both markets are soft at the same time. At September’s pace of sales, there were more than six months of condo apartment supply across the GTA. In the City of Toronto, condo apartments sold at 97% of asking after an average of 40 days, and on a like-for-like basis, GTA condo prices were down 6.7% year over year, the steepest drop of any home type.
The rental side isn’t much stronger. In the second quarter, there were 27,844 condo apartments listed for rent across the GTA, up 2.9% from a year earlier. Average rents for a one-bedroom condo in the City of Toronto were $2,316, down 5.5% year over year. Two-bedrooms averaged $3,154, down 4.4%.
That’s the hardest version of this decision. Selling means selling into the weakest segment of the market. Holding means carrying the unit while rents are also falling.
If you own a house, the picture flips. In September, GTA semi-detached homes had about three months of supply at the current pace of sales. In the City of Toronto, semis sold at 104% of asking in an average of 21 days, and freehold townhouses sold at 102% in 23 days. That’s a market where a well-prepared house sells.
Larger rentals are holding up better too. Three-bedroom asking rents in Toronto were up 3.5% year over year in August, to $3,642. That’s much closer to the market a house competes in when it’s rented.
So a house owner usually has two decent options. A condo owner often has two difficult ones.
What it means for you: before you weigh anything else, know which of these two markets your home is in. It changes the whole conversation.
Run Both Sets of Numbers, Not Just One
A sale price and a rent figure alone don’t answer the question. What matters is what each path nets you over the years you’d actually hold.
On the sell side, that means net proceeds: the sale price minus commission, legal fees, closing costs, and any repairs or concessions it takes to get the deal done. Then ask what that equity does next. For most people it becomes the down payment on the next home. If that home is also in Toronto, you’ll pay both the provincial and the municipal land transfer tax on it, and that comes out of the same pool.
On the rent side, count everything. The mortgage payment is the start, and if your term renews soon, use the renewed payment. Add property tax, condo fees, a maintenance reserve, an allowance for vacancy and turnover, management fees if you won’t manage it yourself, and the separate insurance policy a rental requires. And build the plan on today’s rent, not last year’s.
A rental pays you in three ways: cash flow, which is often thin or negative early on; principal paydown, which the tenant is effectively funding; and appreciation over time. A home that barely breaks even can still be a strong hold. One that cash-flows can still be a poor hold if you need that equity for your next purchase.
The comparison that settles it is what your equity earns sitting in the home versus what it would earn somewhere else. It’s the same question I’d ask about any investment, and it has to be run with local numbers, because rent, taxes, and appreciation vary enough between neighbourhoods to change the answer.
What it means for you: start with two realistic numbers for your specific home — what it would sell for and what it would rent for, based on what comparable homes nearby have actually sold and leased for recently. Everything else in this decision depends on getting those right.
The Four-Year Tax Window
The timing of this decision is largely a tax question, and in Canada it has a specific shape.
While a home is your principal residence, the gain when you sell is generally sheltered. When you convert it to a rental, the Canada Revenue Agency normally treats you as having sold it at fair market value that day and bought it back at the same price. The exemption can cover the gain to that point, but it still has to be reported, and a valuation at the conversion date is worth having.
There’s a way to defer that deemed sale. A simple election filed with your return for the year of the change, known as a subsection 45(2) election, generally lets you keep designating the home as your principal residence for up to four more tax years while it’s rented, as long as your family doesn’t designate another home for those years. So if you’ve already bought your next place, the real decision is which property’s gain you want to protect.
Four years is a generous window to rent, reassess, and sell with most of the exemption intact. Past it, the exemption covers a smaller share of your gain. Meanwhile, rental income is reported every year, the principal portion of your mortgage payment isn’t deductible, and claiming depreciation while the election is in effect cancels it.
What it means for you: this is where a good accountant earns their fee. Go into that conversation knowing the four-year window exists and which home your family plans to designate.
What Changes When You Become a Landlord in Ontario
Turning a home into a rental is a series of practical changes. All of them are manageable, and all of them are better handled before a tenant moves in than after.
Your lender. Most mortgages were approved on the basis that you’d live in the home. Tell your lender before you rent it out, and check whether you need their consent.
Your insurance. A rental you don’t live in needs a separate policy. Tell your insurer before anything changes, and keep a written record. An undisclosed tenant can void the coverage you think you have.
Your condo corporation. In Ontario, you’re required to notify the corporation when you lease your unit, and many buildings have rules on minimum lease terms. Read the declaration and rules before you plan around renting.
Your tenant. Ontario requires its Standard Form of Lease. You can only collect a last month’s rent deposit, not a damage deposit, and you owe the tenant interest on it each year. Rent increases on a sitting tenant are capped at the provincial guideline, 2.1% for 2026, for most units — but units first occupied as residences after November 15, 2018 are exempt from that cap, which covers many of the newer condos in this city. That one detail can change the long-term math on a rental. And if a tenancy goes wrong, it goes to the Landlord and Tenant Board, which isn’t a quick process. Careful screening matters more than anything else on this list.
Your options. In Toronto, short-term rentals are only allowed in your principal residence. Once you’ve moved out, renting it by the night isn’t an option.
The calendar. If you move out and leave the home empty while you decide, watch the dates. Toronto’s Vacant Home Tax can apply to a property that sits vacant for six months or more in a year, at 3% of its assessed value, and every owner has to file an occupancy declaration each year.
Your time. Screening tenants, repairs, late rent, and turnover add up to a few hours in a quiet month and whole days when something breaks. A property manager takes most of that on for a share of the rent, but the decisions and the repair bills stay with you.
None of this is a reason not to do it. All of it is a reason to do it deliberately.
When Selling Is the Better Move
Keeping the home isn’t a free option, and there are plenty of situations where selling is the clearer call.
You need the equity. If the down payment on your next home depends on this one’s proceeds, that usually settles it. Carrying two mortgages, plus double land transfer tax on a Toronto purchase, is where this decision goes wrong most often.
The numbers don’t work. Rent that doesn’t cover the carrying costs, especially after a renewal, is a monthly subsidy to a home you no longer live in. For many condo owners right now, that’s the honest result of running the numbers.
The home needs work. An aging roof, old systems, deferred maintenance. Tenants don’t put those costs off. They bring them forward.
Your home sells well right now. If you own a house in a pocket where homes are selling at or over asking in a few weeks, the softer headline numbers don’t describe your market. That’s a strong position to sell from.
You don’t want the job. Plenty of owners run the numbers, see a decent hold on paper, and still sell because they’d rather have a clean break. That’s a complete reason.
Selling in a slower market isn’t a loss if the proceeds do something better for you.
How to Decide, and When to Revisit It
Most of this comes down to five inputs, looked at together.
1. Two real numbers for your home today: what it would sell for and what it would rent for, from someone who knows your local market.
2. The two nets over a realistic hold period, counting everything on the rent side, including the renewed mortgage payment.
3. The constraints: your lender, your insurance, your condo corporation, and Ontario’s tenancy rules, including whether your unit is rent-controlled.
4. A conversation with your accountant about the four-year election and which home your family will designate.
5. An honest answer about the job. If you don’t want to be a landlord, the math is secondary.
Then build in a review point. Many owners rent for a year or two, reassess against the tax window and the market, and decide with far better information than they had on moving day. Deciding on purpose beats becoming a landlord by default.
Real Numbers, Not Guesses
This is the kind of decision I enjoy helping with, because it’s an investment question as much as a real estate one. I can tell you what your home would sell for and what it would lease for today, based on what’s actually trading near you, and walk through how the two paths compare.
I’ll give you the information, the statistics, and the nuances. The decision is yours. If you’re planning a move and wondering whether to sell or hold, I’d be glad to run the numbers with you.
Sources
1. Market Watch, September 2026 — Toronto Regional Real Estate Board (TRREB)
2. Rental Market Report, Q2 2026 — Toronto Regional Real Estate Board (TRREB)
3. September 2026 National Rent Report (August data) — Rentals.ca / Urbanation
4. Financial Stability Report 2026, Households — Bank of Canada
5. Principal residence: changes in use — Canada Revenue Agency
6. Income Tax Folio S1-F3-C2, Principal Residence — Canada Revenue Agency
7. Rental expenses you can deduct (and Guide T4036, Rental Income) — Canada Revenue Agency
8. Renting out a room? What you need to know about insurance — Insurance Bureau of Canada
9. Rent increase guideline — Government of Ontario
10. Vacant Home Tax — City of Toronto
11. Short-term rentals — City of Toronto