Development charges (DCs) are the fees municipalities levy on new construction to fund infrastructure. On a new GTA house they can run into six figures; BC municipalities levy development cost charges of their own; Alberta's are generally far lighter. Either way, the exemptions matter enormously to small projects.
The big one: additional units are largely DC-exempt
Under Ontario's Bill 23, adding up to three units to an existing home is largely exempt from development charges — the basement suite, the garden suite, the second and third unit. On projects like these, that exemption alone can save tens of thousands of dollars versus what the same floor area would owe as a new build.
Related relief often applies to parkland dedication fees for additional residential units as well. The details are municipal, current, and worth confirming per project — which the report does.
Sales tax on new rental construction
- New residential rental construction has long qualified for a New Residential Rental Property rebate on part of the GST/HST.
- More recently, enhanced federal relief for new purpose-built rental significantly improved the math for dedicated rental buildings — and being federal, it applies in every one of our markets.
- What applies depends on what you build and how it's held — a garden suite behind your own home, a fourplex you rent entirely, and a purpose-built rental building are treated differently.
What changes by province
- Ontario — the Bill 23 DC exemptions above, plus parkland-fee relief on additional units, plus HST rebates on new rental.
- BC — development cost charges vary widely by municipality, and small-scale infill often faces lighter charges than larger projects; the federal rental relief applies on top.
- Alberta — no provincial sales tax at all, generally lower per-unit government charges, and Calgary is waiving secondary-suite permit fees into 2026.
Your property tax will change
Honesty over comfort: adding units usually increases your assessed value, and your property tax with it. Plan for it in the pro-forma — it's a normal operating cost of an income property, and rent typically outweighs it many times over. What surprises owners isn't the amount; it's not having budgeted for it. We include it in your numbers from day one.
The takeaway
Between DC exemptions on additional units and HST relief on rental construction, the incentives currently point the same direction as the zoning: governments want these units built. The savings are real, but they're claimed at specific moments in the process — miss the moment, lose the money. One more reason a single accountable team beats five separate consultants.