Ottawa and Toronto Commit $2.7 Billion to Rentals With 99-Year Property Tax Exemptions on Nine Sites

The partnership runs through two separate financing channels, and only one of them carries the tax break. Getting that distinction right is the whole game.

The non-market channel flows through Build Canada Homes, the federal housing agency launched in 2025. Ottawa is putting in more than $310 million to advance nine projects on City-owned land, aimed at nearly 1,900 rental homes — including more than 700 supportive and affordable units and more than 1,100 rent-controlled homes. To make those projects pencil out, the City of Toronto contributes public land at nominal value plus more than $530 million in capital funding and incentives, and it is inside that City contribution that the up-to-99-year property-tax exemption sits, according to the federal announcement.

The market channel is built very differently. Through the Canada Mortgage and Housing Corporation's Apartment Construction Loan Program, the federal government provides over $1.8 billion in low-cost financing for nine market projects expected to deliver more than 3,700 rental homes, over 1,000 of them affordable, with up to another $600 million available as more Toronto projects become ready. These are private buildings rented at market rates and financed with inexpensive federal debt. No City land, no century-long tax exemption.

The split is the point. When the release and the coverage collapse everything into a single "$2.7 billion for 5,600 rentals" figure, the tax concession vanishes into the average. It applies to the nine non-market, City-owned sites, not the full portfolio.

The announcement is also one thread in a wider federal housing push that leans heavily on tax relief, including new-home sales-tax breaks for buyers.

Ontario and Ottawa's move to eliminate HST on new homes up to $1 million is part of the same policy family: government revenue forgone to make housing math work.

Here is the mechanic the supply framing skips. A municipal property tax bill is not set the way an income-tax bracket is. The City first decides how much revenue it needs to raise in a given year — the levy — and then divides that requirement across the total assessed value of every taxable property in the city. The rate you see is simply the levy divided by the base.

That design has a consequence people rarely notice until it is pointed out. When a parcel is removed from the taxable base, exempted in this case for as long as 99 years, the City's revenue requirement does not shrink alongside it. The bill still has to be paid. The share those exempt parcels would have carried is redistributed across every property still on the roll.

The City's own figures show why the "municipal and school" wording in the announcement matters. For 2026, a residential property faces a 0.605295% city tax rate, a 0.153000% education rate, and a 0.009016% City Building Fund levy, for a combined 0.767311%, as the City of Toronto's property-tax page sets out. The education portion is set by the province and collected by the City; the announced exemption covers both the municipal and the school pieces, which is why it is worth more to a project than a municipal-only break would be.

None of this makes the exemption improper. It makes it structural. And it lands at a time when property taxes are already climbing across the country for reasons that have nothing to do with this deal.

For the broader trend behind rising bills, see our look at what is driving property taxes up in 2026.

Two boundaries keep this in proportion. The exemption is tied to specific City-owned parcels, not to the neighbourhoods around them, and it is attached to the nine non-market projects rather than the full 18-project portfolio. A homeowner three streets away sees no direct change to their own assessment from these sites. What they may eventually notice is the redistribution effect, spread thinly across the entire roll.

Scale matters here too. Toronto's 2026 operating budget counts on roughly $5.79 billion in property-tax revenue, and the municipal property-tax levy by class runs to about $6.25 billion, according to the City of Toronto's 2026 budget summary. Nine exempt sites, even valued as full buildings over a long horizon, are modest against a denominator that large. "Modest" is not "nothing," but it is the honest word, and it is the one missing from a headline built around a $2.7 billion number.

How modest depends partly on where Toronto sits relative to other cities, which is a moving target in its own right.

Our breakdown of where property-tax rates climbed most in 2026 puts Toronto's levy in national context.