Buying a Second Home in Canada (and Renting Out the First)

Today, let’s talk about a really smart strategy some Barrie families are using. Let’s say you’ve built some equity. The kids have outgrown the starter home. Maybe a new job, a growing family, or the need for more space is nudging a move.

But selling the first home? Not so fast.

Across Simcoe County- Barrie, Innisfil, Oro-Medonte, Springwater and beyond- we’re seeing more and more families choose a brilliant alternative:

Buy the second home. Keep the first. Rent it out. Build long-term wealth. Repeat.

Keep reading to learn about the why and the how.

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Put Your Equity to Work for You

Using home equity to buy another property is a strategy The Weeks Group has helped clients execute for years, and when it’s done right, it’s a win/win:

Parents help kids into their first home
Kids eventually buy the second home once income grows
Family keeps the first property as a rental, building equity together

This method is the closest thing to a real-estate cheat code that exists for Canadian families. Let’s break it all down: the financing, the equity math, the tax rules, and the step-by-step playbook for how to buy a second home in Canada without selling your first.

Why This Works So Well (Especially in Today’s Market)

Real estate wealth in Canada doesn’t usually come from massive income- it comes from holding property longer, letting tenants pay down the mortgage, and letting appreciation do the heavy lifting.

Here’s the pattern we have helped clients with a number of times:

Step 1: Parents help kids buy their first home.
Often through:

Gifted down payment
Loaned down payment
Co-signing on the mortgage
Joint ownership

Curious about real estate investing? The posts below will show you some possibilities:

Step 2: Kids build equity + build their careers.
Over 3–7 years, three things tend to happen:

Salaries increase
Mortgage balance decreases
Home value rises, and,
Boom: built-in equity + stronger borrowing power.

Step 3: Kids need a bigger home. More space, more bedrooms, better location- life evolves.

Step 4: Instead of selling the first home, the family keeps it as a rental. The kids “buy out” half the down payment the parents originally contributed.

The result is:

Parents recover capital and now own part of an income property.
Kids keep an appreciating asset they could never afford to “buy back” later.
This becomes the foundation of multi-generational wealth.

How to Buy a Second Home in Canada (Financially)

Here’s where the big question comes in: “How do you get a second mortgage in Canada?” The answer is to use your home equity to buy a second home.

(One of the highest-search questions and one we have blogged about before: “How to use equity to buy a second home in Canada?”) If the first property has appreciated or the mortgage has been paid down, that equity can be accessed through:

HELOC (Home Equity Line of Credit)
Refinance
Blend & Extend mortgage refinance
Equity take-out mortgage

Lenders typically allow borrowing up to 80% of the home’s value.

Ready to start your home search in Barrie or Simcoe County? Start here with our featured properties.

Use Rental Income to Qualify for the Second Mortgage

This is key.

If you plan on renting out your current home, lenders will often count a portion of the projected rental income toward your debt ratios- meaning you qualify for more house.

Most lenders use: 50–70% of projected rent

Co-signing or Joint Ownership (Multi-Gen Strategy)

This is the Canadian classic:

Parents co-sign or partner on the second home
Kids qualify for a bigger mortgage
Parents may retain partial ownership of the rental property

When structured correctly, this creates:

Reduced mortgage stress
Shared long-term equity
A stronger financial base for both generations

Tax Implications of Buying a Second Home in Canada

When you convert your primary residence to a rental, here’s what really matters:

Primary Residence Exemption

When you move out, you can designate the property as your principal residence for up to 4 additional years even if you don’t live there, provided:

You don’t designate another home as your principal residence during that time, OR You move back in before selling.

This is known as the “Change of Use Election” under Section 45(2). It can save families tens of thousands in capital gains tax.

Looking for some more home buying tips? The posts below are full of insight:

Capital Gains Tax (If You Sell Later)

Once the property is no longer designated as your principal residence, future appreciation may be taxable. But smart planning can reduce this significantly.

We always recommend speaking with a tax specialist if:

Parents retain partial ownership
Property is refinanced heavily
You intend to hold long-term

How Long Do You Have to Live in a Primary Residence Before Renting It in Canada?

There is no minimum period written in Canadian tax law. However:

The CRA expects genuine intention to live there. “Flipping” rules apply only if the property was bought primarily to sell

Thousands of Canadians move out and rent after 1–3 years — it’s completely normal.

Second Home Down Payment Requirements in Canada

A second home generally requires:

5% down if it will be owner-occupied and under $500K
10% down on the portion between $500K–$999,999
20% down if you will not be living in the home (pure rental)

When buying the second home for yourself while renting out the first: 

Many families still qualify under the owner-occupied down payment rules, even if they intend to rent out their original home later. This is another reason this strategy is so popular.

Planning to sell your primary residence or an investment property? The posts below can help you strategize:

Buying a Second House Without Selling the First:

Why Families Love This Strategy

After helping clients purchase property, here are three things we love hearing:

1. “We couldn’t afford to buy this home today.“

Keeping the starter home means kids retain an asset that has become much more expensive over time.

2. “We knew this would help our retirement, too.“

Parents who help their kids get into the market can actually profit from their generosity when structured as a joint rental investment.

3. “It built wealth for both sides.“

The family ends up owning two appreciating assets instead of one. This is how generational momentum is built.

A Real-Life Weeks Group Example

Here’s a scenario we’ve helped multiple families execute:

Parents help kids with the down payment. Kids buy a starter home and actually build out and rent the basement and use the rents to pay back the parents up to 50% of their front money.
Kids build equity and careers.
Kids outgrow the home (kids, pets, lifestyle, etc.).
Parents and kids decide NOT to sell the starter home.
Kids “buy back” 50% of the original down payment to keep things fair.

The original home becomes a rental.

Rental income offsets costs.
Parents now have a growing retirement asset.
Kids move into the next home and repeat the wealth cycle.

It’s smart. It’s strategic. And it’s growing in popularity in Southern Ontario markets.

Let’s Talk Strategy.

There is no one-size-fits-all approach. Your income, equity, timeline, tax situation, and long-term goals all shape the best path.

The Weeks Group has helped families across Barrie, Simcoe County, and cottage country run this strategy successfully- from the financing structure to the tax timing to rental pricing to choosing the right home to buy second.

If you’re thinking about:

How to get a second mortgage
How to buy a second home in Canada
How to use home equity to buy another property
How to rent your home without headaches
How to build wealth across generations

Our Barrie real estate agents are here to help make your next move a smart one. Reach out at 705.305.4174 or email hello@weeksgroup.ca to talk strategy.

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