Moving a Parent to a Retirement Home: Sell, Rent or Keep the House

The short answer

When you are moving parents to a retirement home, what to do with the house is usually the largest decision left on the table. There are three realistic options: sell it, rent it out or keep it empty for now. Each one has a different effect on taxes, on monthly costs and on how much work falls to the family.

This post compares the three using the rules the Canada Revenue Agency and the Province of Ontario publish. It is general information, not tax or legal advice. Before you act, confirm your parent’s situation with an accountant and a real estate lawyer. Our Markham downsizing guide covers the wider move, from choosing what to keep to timing a sale.

Start with who can sign and how care is paid for

Two questions shape everything else, so answer them first.

The first is who has the legal authority to make the decision. If your parent can manage their own affairs, it is their house and their call. If they cannot, Ontario explains that an attorney for property named in a continuing power of attorney can make decisions about their finances, including maintaining or selling their house. Without a power of attorney, family members, even a spouse, cannot automatically step in and may need to go to court to be appointed guardian. Ontario describes the Office of the Public Guardian and Trustee as a last resort. Our posts on selling a house with power of attorney in Ontario and selling a parent’s house in Markham go through the signing side in detail.

The second is how care will be paid for. Ontario draws a clear line between the two main settings:

Setting	How Ontario describes the cost
Retirement home	Privately owned. Residents pay the full cost of their own housing and care, with no government funding.
Long-term care home	Personal and nursing care are government funded. Residents pay a co-payment toward accommodation and meals.

For long-term care, Ontario sets maximum co-payment rates that apply at every home, for profit or not for profit. As of July 1, 2026, the long-stay maximums are:

Room type	Daily	Monthly
Basic	$70.00	$2,129.17
Semi-private	$84.40	$2,567.17
Private	$100.01	$3,041.97

Residents in basic accommodation who cannot afford the co-payment may qualify for the Long-Term Care Rate Reduction Program. Ontario notes that regular semi-private and private rooms are not eligible for a reduction. Check the Ontario long-term care cost page for the current rates before you build a budget, because they are updated.

If the house is the main source of money for care, that often settles the question. If care is covered from income and savings, the family has more room to choose.

Option one: sell the house

Selling turns the house into a known amount of money and ends the bills that come with owning it: property tax, utilities, insurance, maintenance and snow and lawn care.

On the tax side, a home qualifies as a principal residence for a year when, among other conditions, the owner or their spouse, former spouse or child lived in it at some time during that year. The CRA says the sale of a principal residence must still be reported, on Schedule 3, Capital Gains or Losses and on Form T2091(IND), Designation of a Property as a Principal Residence by an Individual. Reporting applies even when no tax is owing. If the house sits empty for a long stretch before it sells, ask an accountant how those years are treated, because the designation depends on the facts year by year.

The practical tradeoffs of selling:

• The family home is gone. If there is any chance your parent will move back, selling closes that door.
• Someone has to clear the house, which takes time and emotional energy.
• The proceeds have to be managed and may affect your parent’s income for other purposes. An accountant can explain what that means for them.

If you are leaning toward a sale, start with a realistic number. A free home valuation and a look at recent sales in Markham will show what similar homes have actually sold for. Our sellers page explains how we work with families selling on behalf of a parent.

Option two: rent it out

Renting keeps the house in the family and brings in income that can help pay for care. It also changes your parent’s position in two important ways.

The tax side of renting

The CRA treats turning a principal residence into a rental as a change in use. Its guidance says that every time you change the use of a property, you are considered to have sold it at fair market value and immediately bought it back for the same amount. That can create a capital gain on paper, even though nothing was sold.

There is an election that avoids this. Under subsection 45(2) of the Income Tax Act, the owner can elect not to be considered as having started to use the home as a rental. The CRA says that with this election in place:

• the home can be designated as a principal residence for up to four years, even when nobody in the family lives there
• capital cost allowance, the tax deduction for depreciation, cannot be claimed on the property
• no other property can be designated as the owner’s principal residence for those years
• the owner must be resident in Canada

The CRA says the election is made by attaching a letter signed by the owner to their income tax and benefit return for the year the change in use happens. The letter describes the property and states that the owner wants subsection 45(2) to apply. If your parent cannot sign, their attorney for property should confirm with a lawyer and accountant how the letter is signed and filed.

Rental income is reported every year. The CRA uses Form T776, Statement of Real Estate Rentals, to calculate rental income and expenses. Gross rent goes on line 12599 of the return and the net figure from line 9946 of the T776 goes on line 12600. If the house is owned jointly, the CRA says to enter the gross rent for the entire property on line 12599 rather than splitting it by ownership share.

The landlord side of renting

Renting makes your parent a landlord under Ontario’s Residential Tenancies Act, 2006. That carries real obligations:

• Ontario requires landlords of most private residential rental units to use the standard lease for new leases. A lease cannot take away a right or responsibility under the Act.
• The Act requires the landlord to keep the rental unit in a good state of repair and fit for habitation.
• Entry generally needs at least 24 hours’ written notice and is limited to between 8 a.m. and 8 p.m.
• Rent increases are controlled by rules on timing, notice and, for many units, an annual guideline the province sets.
• A tenant cannot be removed without an eviction order from the Landlord and Tenant Board. If the landlord needs the home back for their own use, the Act requires at least 60 days’ written notice and Ontario’s tenant rights page sets out the compensation the landlord must provide in that case.

That last point matters for a family. If you later decide to sell, a tenant in place can limit when and how the house is shown and when a buyer can take possession. Build that into the decision now rather than finding out later.

Someone also has to manage the tenancy: repairs, rent collection, the tenant’s calls and the paperwork. If that falls to an adult child who already handles their parent’s care, it is worth being honest about the time involved.

Option three: keep it empty for now

Some families need time. A parent may be in a trial stay, the family may not agree yet or no one has the energy to clear forty years of belongings in a few weeks. Keeping the house empty for a while is a legitimate choice.

It does not, however, pause the costs. Property tax, utilities, insurance, maintenance and the mortgage if there is one all continue while no income comes in.

Insurance needs particular attention. Home insurance policies have their own conditions for a home that is unoccupied and they differ from insurer to insurer. Call your parent’s insurer before the move, tell them the home will be vacant and ask what they require, such as how often the home must be checked, whether the heat must stay on and whether the water should be shut off. Get the answer in writing.

On the tax side, keeping the house empty is not a change in use to a rental, because no rent is being earned. Whether the years it sits empty can be designated as a principal residence depends on whether anyone in the family lived in it in each year. That is a question for an accountant.

Comparing the three options

	Sell	Rent it out	Keep it empty
Money for care	Lump sum once it closes	Monthly rent, less expenses	None, costs continue
Tax reporting	Sale reported on Schedule 3 and Form T2091(IND)	T776 every year plus a change in use and the option of a 45(2) election	Designation for empty years to confirm with an accountant
Ongoing work	Ends after closing	Landlord duties under the Residential Tenancies Act	Checks, maintenance and insurer conditions
Flexibility later	None, the home is sold	Limited by the tenant’s rights	Full, the house is still there

None of these is the right answer for every family. The right one depends on your parent’s care costs, their wishes, the family’s capacity to manage a property and the advice of an accountant and a lawyer who know the details.

What to do next

1. Confirm who has authority to act. Find the power of attorney for property or speak to a lawyer if there is none.
2. Work out the monthly cost of care and how it will be paid.
3. Ask an accountant how each option affects your parent’s taxes, including the principal residence designation and, if you are considering renting, the subsection 45(2) election.
4. Call the home insurer about vacancy before anyone moves out.
5. Get a realistic value for the house so the comparison uses real numbers.

Our senior downsizing checklist helps with the clearing out and our estate home guide covers the related situation when a home is sold after a parent passes away.

If you would like to talk through the options for your parent’s Markham home, contact us and we will walk you through what a sale would involve.