Your options before you sell: keep, add a suite, sell or build with a builder

Key takeaways

• The City's Multiplex Housing page says four-unit multiplexes are permitted city-wide, and an existing house can be converted to hold two, three or four homes.
• A second, third or fourth home on a Toronto residential lot is exempt from City development charges when the lot holds no more than four homes in total.
• A garden suite needs a building permit and stays on the same lot as the house. The City does not allow a lot split between the two.
• CMHC's Refinance program covers owner-occupied homes of up to 4 units, up to 90 percent of the value, below $2,000,000, with up to 30 years to repay.
• Ontario's rent increase guideline is 1.9 percent for 2027. New buildings and additions first occupied after November 15, 2018 are exempt from it.
• Renting part of your home can change how the Canada Revenue Agency treats that part when you sell. Ask your accountant before you build.

Five choices for one lot

Many owners who call me start with one question: should I sell? Before you answer it, ask what the lot could do for you if you keep it. A family looks at your house and sees rooms. A builder looks at the same lot and counts the homes it could hold. You can look at it both ways, and that gives you five choices.

1. Keep the house as it is.
2. Add homes and stay: a suite inside the house, a garden suite in the back yard, a laneway suite facing a lane, or a conversion of the house into several homes.
3. Sell the house to a family.
4. Sell the lot to a builder.
5. Build with a builder and keep part of what is built.

The right choice depends on your age, your plans, your savings and your lot. Every rule comes from a City of Toronto, Government of Ontario, CMHC or Canada Revenue Agency page that I read on November 7, 2026. The list at the end gives the date each page was last changed. Your lawyer and your accountant give the advice on your own property.

Choice 1: keep the house as it is

Keeping the house costs nothing new today. You keep the land and what the zoning allows on it. The City has added to those permissions since 2019. Council allowed laneway suites in the R, RD, RS, RT and RM zones on July 16, 2019, according to the City's laneway suites page, and the City's Multiplex Housing page says four-unit multiplexes are now permitted city-wide.

If you keep the house, find out what your lot could hold anyway. The lot check guide shows how to read your zone label on the City's map. That answer tells you whether the other four choices are open to you later. If the house will sit empty for a long time, for example after a parent moves to care, read the section on the Vacant Home Tax in selling an inherited house, because the City taxes some empty homes.

Choice 2: add homes and stay

With this choice you keep the land and add homes to it. You can rent the new homes, or use them for family. Toronto's rules allow three kinds of addition in the residential zones.

• More homes inside the main building. The City's page on building multiplexes says you may convert an existing house to contain two, three or four units, or build a new duplex, triplex or fourplex. Some areas allow six. The multiplex zoning guide lists where.
• A garden suite: a separate small home in the back yard. The City's Garden Suites page says the zoning by-law permits them in the R, RD, RS, RT and RM zones.
• A laneway suite: a separate small home at the back of a lot that faces a public lane. The City's laneway suites page calls it a self-contained home on the same lot as a house.

The City says a garden suite or laneway suite can also sit on the same property as a multiplex, if certain conditions are met. Since February 3, 2022, duplexes, triplexes and fourplexes need no parking spaces on the property.

What the City asks for

The City's Garden Suites page says a building permit is required to construct a garden suite. The suite stays on the same lot as the house: the City does not allow a lot split that would put the house and the garden suite on two separate lots, and the water and sewer pipes are meant to connect through the main house. So a garden suite adds a home you can rent or use, on the same property as your house. Toronto Building, the City division that reviews building plans, answers permit questions at 416-397-5330.

What it costs in City charges

When new homes are built, the City collects fees called development charges. For an owner adding homes, the Garden Suites page points to an exemption: section 415-6(A)(2) of By-law 1137-2022 exempts a second, third or fourth home on a residential lot, as long as the lot holds no more than four homes in total. The same page says these additions are also exempt from the City's parkland fee when the lot holds no more than five homes.

The construction itself is your cost. I have no City figure for it, so ask a designer and two or three builders to price your plan before you decide.

Paying for it

Some owners pay for a suite by refinancing, which means replacing the mortgage with a larger one. CMHC, the federal housing agency, insures a refinance for this purpose. Its Refinance page sets these rules for homes the owner lives in:

You apply through a lender. Ask the lender how the loan size, the insurance cost and your payments work out for your own home.

If you rent the new home

Renting a suite makes you a landlord under Ontario's rules. The Government of Ontario's rent increase guideline page, updated June 23, 2026, sets the guideline at 2.1 percent for 2026 and 1.9 percent for 2027. The guideline is the most a landlord can raise the rent without approval from the Landlord and Tenant Board, once at least 12 months have passed, with at least 90 days' written notice in the proper form.

The same page lists new buildings, additions to existing buildings and most new basement apartments first occupied for residential use after November 15, 2018 as exempt from the guideline. A new garden suite or a new unit in your house may fall under that exemption. Ask a lawyer how it applies to your unit before you sign a lease.

Tax on your home when part of it is rented

The Canada Revenue Agency's principal residence page, modified February 5, 2026, says the CRA usually considers you to have changed the use of the part of your home you rent, unless three things are true: your rental use is "relatively small" compared with your use of the home, you make no structural changes to make it more suitable for rental, and you deduct no capital cost allowance (a tax deduction for the wear on a building) on that part. If you build a suite to rent, the second condition is the one to discuss with your accountant before you start.

Choice 3: sell the house to a family

A family buys a home to live in. They look at the kitchen, the bedrooms and the schools, and they compare your house with the houses that sold on your street. Their offer usually depends on financing and a home inspection, and the closing date is the one you both agree.

In my view, this choice suits a house in good condition on a lot where the zoning adds little beyond the house itself. The overview for sellers compares a family sale and a builder sale side by side, and lists the costs a seller pays.

Choice 4: sell the lot to a builder

A builder prices the lot by the homes it could hold, then works back from the finished homes to a land price. The guide on how builders price land explains that math, and why two builders can offer two different prices for one lot. A builder's offer often comes with conditions, such as time to check the zoning or a City approval, and a longer closing. The guide to builder offers covers those conditions, the deposit and the dates.

Two cases can change the offer. If your neighbours are also thinking of selling, a builder may pay for two or three lots together, which selling with your neighbours explains. If the house belongs to an estate, selling an inherited house covers who signs and when the heirs must agree.

Choice 5: build with a builder

Some owners can redevelop with a builder and keep one of the new homes, or a share of the result. It depends on the lot, the zoning and the builder. Every version of this choice is a contract, and your lawyer writes or reviews it. The contract should answer these questions:

• Who owns the land while the homes are built?
• Which home do you receive, or what share, and on which date?
• Who arranges and repays the construction loan?
• Who pays if construction costs rise or the City approves fewer homes than planned?
• What happens to your land if the builder stops work?

The Canada Revenue Agency's guide RC4052 (revision 24) explains when an individual counts as a builder for GST/HST. It says a builder that leases new housing for long-term residential use may have a self-supply, with tax on the fair market value of the building and the land, on the later of the date construction is substantially complete and the date a tenant takes possession. Ask your accountant before you sign with a builder.

Questions to ask before you decide

• What does my zoning allow, and how many homes could my lot hold?
• How much rent or family space would a suite give me, and what would it cost to build?
• Do I want to be a landlord for the next 10 or 20 years?
• What would a family pay for the house, and what would a builder pay for the lot?
• What do my lawyer and my accountant say about each choice?

There is no obligation to sell. When I review a lot with an owner, I read the zoning and the lot size, and I can present the lot to builders so you can compare their offers with what a family would pay. Use the contact page to set up a review. Before you ask what the house down the street sold for, ask what your lot could become.

Frequently asked questions

Should I sell my Toronto house or add a suite and stay?

Whether to sell your Toronto house or add a suite and stay depends on your plans, your savings and your lot. Adding a suite keeps the land and can bring rent or room for family, and it needs a design, a building permit and money for construction. Selling gives you the money now. Compare a builder's offer, a family's offer and the cost of building before you decide.

How many homes can I add to my Toronto house lot?

In Toronto's residential zones a house lot can hold up to four homes in one building. The City's Multiplex Housing page, modified August 26, 2026, says four-unit multiplexes are permitted city-wide, and six-unit permissions apply in the Toronto and East York District and Ward 23. The City also says a garden suite or laneway suite can sit on the same property as a multiplex if certain conditions are met.

Can I convert my existing Toronto house into a multiplex?

You can convert an existing Toronto house into a multiplex in the zones that allow one. The City's page on building multiplexes, modified June 30, 2025, says you may convert an existing house to contain two, three or four units. Check your zone label on the zoning map first, then ask Toronto Building, the City division that reviews building plans, which permits the conversion needs.

Do I pay development charges to add a garden suite or a second unit in Toronto?

Adding a second, third or fourth home to a Toronto residential lot is exempt from City development charges, as long as the lot holds no more than four homes in total. The City's Garden Suites page, modified August 21, 2026, points to section 415-6(A)(2) of By-law 1137-2022 for this exemption. Development charges are fees the City collects when new homes are built.

Can I sever a garden suite and sell it separately in Toronto?

A garden suite in Toronto stays on the same lot as the main house, so it cannot be sold on its own. The City's Garden Suites page, modified August 21, 2026, says lot splits that would put the main house and the garden suite on two separate lots are not permitted. The page also says water and sanitary pipes are intended to connect from the main house.

Do I need a building permit for a garden suite in Toronto?

You need a building permit to build a garden suite in Toronto. The City's Garden Suites page, modified August 21, 2026, says a building permit is required to construct a garden suite. The suite must also meet the zoning rules for garden suites, which set its size, its height and its distance from the house. Toronto Building answers permit questions at 416-397-5330.

Can I refinance my mortgage to build a secondary suite in Toronto?

You can refinance your mortgage to build a secondary suite in Toronto through CMHC's Refinance program for secondary suites. CMHC's page says it covers owner-occupied homes of up to 4 units including the existing ones, up to 90 percent of the value, a property value below $2,000,000 and up to 30 years to repay. The extra money must go to building the suite, and the suite cannot be rented for less than 90 days at a time.

Does rent control apply to a new suite I build and rent out in Ontario?

A new suite first lived in after November 15, 2018 is exempt from Ontario's rent increase guideline. The Government of Ontario's rent increase guideline page, updated June 23, 2026, lists new buildings, additions to existing buildings and most new basement apartments first occupied for residential use after that date as exempt. Ask a lawyer which other rules apply to your own unit before you sign a lease.

What is Ontario's rent increase guideline for 2027?

Ontario's rent increase guideline for 2027 is 1.9 percent, and it was 2.1 percent for 2026. The Government of Ontario's rent increase guideline page, updated June 23, 2026, gives both figures. It says rent can go up once at least 12 months have passed since the last increase or the start of the tenancy, with at least 90 days' written notice in the proper form.

Will renting part of my house affect my principal residence exemption?

Renting part of your house can change how the Canada Revenue Agency treats that part when you sell. The CRA's principal residence page, modified February 5, 2026, says it usually considers the use of that part changed unless the rental use is "relatively small" compared with your own use, you make no structural changes to make it more suitable for rental, and you deduct no capital cost allowance. Ask your accountant first.

Can I build with a builder and keep one of the new homes?

Some Toronto owners can redevelop with a builder and keep one of the new homes. Whether it works depends on the lot, the zoning, the builder and a written agreement your lawyer prepares. The agreement should say who owns the land during construction, which home you receive and when, who pays if costs rise, and what happens if the City approves fewer homes than planned.

Do I pay HST if I build new homes on my lot and rent them out?

You may have to pay GST/HST if you build new homes on your lot and rent them out. The Canada Revenue Agency's guide RC4052, revision 24, says a builder who leases new housing for long-term residential use may have a self-supply, taxed on the fair market value of the building and land. The guide sets out when an individual counts as a builder, so ask your accountant before construction starts.

Do I need parking if I add homes to my Toronto house?

You do not need to add parking when your Toronto house becomes a duplex, triplex or fourplex. The City's page on building multiplexes, modified June 30, 2025, says that as of February 3, 2022, duplexes, triplexes and fourplexes are not required to provide parking spaces on the property. If you do provide parking, it must meet the standards in the zoning by-law.

Sources

1. Multiplex Housing. City of Toronto. Modified August 26, 2026. Accessed November 7, 2026.
2. Considerations When Building Multiplexes. City of Toronto. Modified June 30, 2025. Accessed November 7, 2026.
3. Garden Suites. City of Toronto. Modified August 21, 2026. Accessed November 7, 2026.
4. Changing Lanes: Laneway Suites in Toronto. City of Toronto. Modified February 29, 2024. Accessed November 7, 2026.
5. CMHC Refinance for Building Secondary Suites. Canada Mortgage and Housing Corporation. No date shown, page copyright 2026. Accessed November 7, 2026.
6. Rent increase guideline. Government of Ontario. Updated June 23, 2026. Accessed November 7, 2026.
7. Principal residence and other real estate. Canada Revenue Agency. Modified February 5, 2026. Accessed November 7, 2026.
8. RC4052 GST/HST Information for the Home Construction Industry. Canada Revenue Agency. RC4052(E) Rev. 24. Accessed November 7, 2026.

Planning and development potential is property-specific and subject to zoning, approvals, site conditions, municipal review and other due diligence. This guide gives general information. For legal, tax or financial advice, ask your own lawyer and accountant.