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With the rising cost of homeownership, many homeowners in Fort Erie are looking for ways to offset monthly expenses. One of the most common solutions is creating a basement apartment or renting out a portion of the home.
Whether you’re welcoming a long-term tenant, accommodating a family member, or generating extra income, renting part of your property can be a smart financial decision. However, many homeowners ask the same question:
“Will renting part of my home affect my tax exemption when I sell?”
The answer is: it depends.
Understanding the rules before making renovations or listing your property can help you avoid unexpected tax consequences down the road.
What Is the Principal Residence Exemption?
Canada’s Principal Residence Exemption allows many homeowners to sell the home they live in without paying capital gains tax on the increase in value.
For homeowners across Fort Erie, Ridgeway, Crystal Beach, Stevensville and the Niagara Region, this exemption is one of the most valuable financial benefits of owning a home.
However, as more homeowners create secondary suites to generate rental income, questions about how these rentals affect the exemption have become increasingly common.
The good news is that renting part of your home doesn’t automatically eliminate the exemption.
When Does the Exemption Still Apply?
According to the Canada Revenue Agency, your home may still qualify as your principal residence if the rental portion remains secondary to your personal use of the property.
Generally, the exemption may still apply if:
- You continue to live in the home as your primary residence.
- The rental use is incidental to your personal occupancy.
- No major structural changes were made specifically to create the rental unit.
- You have not claimed Capital Cost Allowance (CCA) on the rental portion.
Many homeowners throughout Fort Erie have basement apartments that meet these conditions.
However, every property is unique, and professional tax advice is always recommended.
What If Your Basement Is Fully Self-Contained?
This is where things become more complicated.
Many newer secondary suites include:
- A separate entrance
- Their own kitchen
- A full bathroom
- Independent living space
While these features can make a property more attractive to tenants—and even future buyers—they may also create additional tax considerations depending on how the space was developed and used.
The CRA evaluates each situation individually, which is why it’s important to speak with a qualified accountant before selling a home that includes a secondary suite.
Why This Matters in Fort Erie
Secondary suites have become increasingly popular throughout Fort Erie.
Some homeowners are creating in-law accommodations for aging parents, while others are looking to supplement household income or help adult children save for their own homes.
Communities such as Stevensville, Central Fort Erie and Ridgeway have seen growing interest in homes that offer flexible living arrangements.
For buyers, a legal secondary suite can provide valuable income potential.
For sellers, it can also make a property more appealing—but understanding the tax implications before listing is an important part of the planning process.
Planning Before You Sell
If your home includes a basement apartment or rental suite, don’t wait until closing to ask questions.
Before listing your property, consider speaking with:
- Your REALTOR®
- Your accountant
- Your lawyer
Each professional plays a different role in helping ensure your sale proceeds smoothly.
Understanding your obligations early allows you to make informed decisions and avoid surprises after the transaction is complete.
Local Perspective
One of the reasons Fort Erie continues to attract buyers is the variety of housing available. From charming century homes in Ridgeway to newer subdivisions in Stevensville and waterfront properties near Crystal Beach, many homes offer flexible living spaces that appeal to today’s buyers.
As housing needs continue to evolve, secondary suites will likely remain an important feature of our local market. The key is ensuring they’re created—and eventually sold—with a clear understanding of both municipal requirements and federal tax rules.
Did You Know?
Adding a secondary suite may increase your property’s appeal, but it doesn’t automatically increase its market value dollar-for-dollar. Buyers will consider factors such as location, parking, legal status, condition and overall functionality when determining value.
Download My FREE July 2026 Niagara Real Estate Newsletter
Download My FREE July 2026 Niagara Real Estate NewsletterLooking for more local real estate insights?
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- Current mortgage rates
- Fort Erie and Niagara housing statistics
- Buying and selling advice
- Homeowner tax reminders
- Local market trends
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July 2026 Niagara Real Estate Newsletter
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If you’re buying, selling or investing in Fort Erie, Ridgeway, Crystal Beach, Stevensville, Crescent Park, Point Abino or anywhere in the Niagara Region, I’d be happy to answer your questions and provide local market advice tailored to your goals.
