How Canada’s 2025 Tax Measures Empower Residential Developers

Canada’s housing shortage remains a critical challenge in 2025, but recent federal initiatives are giving residential developers new tools to boost affordability and improve project viability. Through enhanced depreciation incentives and tax rebates, these measures can significantly improve the economics of purpose-built rental housing.  

Accelerated Capital Cost Allowance for Purpose-Built Rental Housing 

Budget 2024 introduced a temporary increase in the Capital Cost Allowance (CCA) from 4 percent to 10 percent for eligible new purpose-built rental housing projects¹. To qualify, projects must: 

  • Include at least four self-contained private apartment units or ten private rooms/suites, 
  • Have at least 90 percent of units held for long-term rental, 
  • Begin construction on or after April 16, 2024, start before January 1, 2031, and be available for use before January 1, 2036¹. 

This incentive accelerates depreciation deductions in the early years of a project, improving cash flow. According to the Parliamentary Budget Officer, it defers revenue rather than reducing total recoverable amounts over time¹. 

100 Percent GST/HST Purpose-Built Rental Housing Rebate (PBRH) 

Under Bill C56 (the Affordable Housing and Groceries Act), the federal government enacted a full 100 percent GST (or federal HST) rebate for qualifying purpose-built rental housing². Eligible projects must: 

  • Begin construction after September 13, 2023, and substantially complete before 2036, 
  • Meet the same unit-count and long-term rental criteria noted above². 

Importantly, the rebate has no fair-market-value cap, making even higher-value units eligible. CRA documentation from mid-2025 confirms this full rebate and the removal of prior value limitations³. 

How These Measures Work Together 

These incentives combine to yield significant financial benefit: 

Incentive  Strategic Benefit 
10 percent Accelerated CCA  Increases early-stage tax deductions, enhancing cash flow. 
100 percent GST/HST Rebate  Eliminates GST burden on new builds, lowering upfront costs. 

Together, they reduce initial outlays, support more competitive financing, and align development with national housing objectives. 

2025 Provincial Enhancements: Ontario’s HST Rebate 

In May 2025, the Ontario government extended the federal approach by eliminating the 8 percent provincial HST on new purpose-built rental housing. This effectively removes the full 13 percent HST burden in Ontario, further enhancing affordability⁴. 

Key Considerations 

Developers must carefully manage project timelines and documentation to ensure compliance: 

  • Construction and completion windows are strict and missing them can disqualify projects from benefits¹². 
  • The accelerated CCA does not alter total depreciation, it simply changes timing¹. 
  • CRA has clarified that the required four-unit minimum must exist within a single interconnected building; adjacent but separate structures may not qualify³. 

How Zeifmans Helps 

Zeifmans offers comprehensive support to help developers navigate these incentives: 

  • Evaluating eligibility for both federal incentives and provincial enhancements. 
  • Structuring project schedules and financing to align with key tax windows. 
  • Preparing documentation for CRA compliance and successful rebate claims. 
  • Modeling tax and cash-flow implications to inform strategic decision-making. 
  • Guiding long-term planning around reinvestment and exit strategies. 

With strategic planning, Canada’s 2025 tax landscape offers major benefits for residential developers. Enhanced CCA and the full GST/HST rebate significantly improve project viability, particularly in the purpose-built rental sector. In Ontario, this impact is amplified by the provincial HST elimination. At Zeifmans, we ensure your projects capture the full value of these tax opportunities, now and into the future. 

Footnotes 

  1. Parliamentary Budget Officer, Accelerated Capital Cost Allowance for Eligible New PurposeBuilt Rental Housing, May 22, 2024. https://www.pbo-dpb.ca/en/publications/LEG-2425-005-S–accelerated-capital-cost-allowance-eligible-new-purpose-built-rental-housing–deduction-amortissement-accelere-nouveaux-logements-admissibles-destines-location  
  2. Canada Revenue Agency, GST/HST PurposeBuilt Rental Housing Rebate (PBRH rebate), updated June 23, 2025. https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/gst-hst-businesses/gst-hst-rebates/purpose-built-rental-housing.html  
  3. Canada Revenue Agency, Notice 336 – PurposeBuilt Rental Housing Rebate, June 2024 (Q&A section confirming value and timeline conditions). https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/notice336/purpose-built-rental-housing-rebate.html  
  4. Ontario Budget 2025, Lowering Taxes on PurposeBuilt Rental Housing, May 15, 2025 (HST elimination details). https://budget.ontario.ca/2025/chapter-1b-costs.html  

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