Buying an Investment Property in Kelowna
Kelowna’s rules for investment property changed again in 2026. Short-term rental rules, the speculation and vacancy tax and federal housing taxes all moved this year, and each one changes the numbers on a rental, a suite or a short hold. This page sets out what applies right now, as of October 2026, so you can run the numbers before you write an offer. It is general information, not tax or legal advice: confirm your own situation with an accountant and a lawyer.
Short-term rentals in Kelowna
Kelowna was exempted from the provincial principal-residence requirement for short-term rentals on June 1, 2026. That does not open the door to whole-home Airbnbs, because the City of Kelowna keeps its own rules:
- A “minor” short-term rental is only allowed in the operator’s principal residence (lived in at least 240 days a year). A suite or carriage house can be rented short term only if the owner lives on the same lot.
- A “major” short-term rental, with no owner on site, is only allowed in buildings rezoned to the City’s short-term rental subzone. The City lists roughly 25 eligible addresses.
- Every short-term rental needs a City business licence ($50 application plus $345 a year) and registration with the provincial short-term rental registry, which has been mandatory since May 1, 2025. Provincial registration costs $100 a year if you live in the home and $450 if you do not.
- City limits apply to every short-term rental: one booking at a time, no more than 2 adults per bedroom, no more than 3 bedrooms per unit.
- Since the 2024 tax year, the CRA does not allow expense deductions on a short-term rental that is missing the required licence or registration.
Sources: Province of BC, Principal residence requirement; City of Kelowna, Short-term rentals; CRA.
Suites, carriage houses and multi-unit lots
Since March 18, 2024, Kelowna’s zoning allows up to 4 units on most suburban lots and up to 6 in the Core Area on larger lots that can fit the parking. The City’s Infill Fast-Track offers pre-approved designs for 2 to 6 units on more than 1,800 eligible Core Area lots, with a target of a permit within 10 business days. Near transit exchanges in Rutland, the Hospital area, Okanagan College and Orchard Park, taller buildings are allowed. For an investor, that makes the lot, not just the house, part of the value.
Source: City of Kelowna, Infill housing.
Long-term rentals: what the market looks like
- Rental vacancy in the Kelowna area was 6.3% in October 2025, up from 3.6% a year earlier, and the average two-bedroom rent was $2,098 (CMHC Rental Market Survey, October 2025).
- The maximum annual rent increase for an existing tenant in BC is 2.3% in 2026 and 2.2% in 2027. Rent can go up once every 12 months, with 3 full months’ notice (Residential Tenancy Branch).
Higher vacancy means more choice for tenants, so pricing a rental correctly matters more than it did two years ago.
Taxes that apply to Kelowna investment property
Speculation and Vacancy Tax
Kelowna, West Kelowna, Lake Country and Peachland are taxable areas. For 2026 the rate is 1% of assessed value for Canadian citizens and permanent residents and 3% for foreign owners, rising to 4% for foreign owners from 2027. Most owners who live in the home or rent it long term qualify for an exemption, but everyone must file the annual declaration. (Province of BC, Speculation and Vacancy Tax)
BC Home Flipping Tax
Since January 1, 2025, profit on residential property sold within 730 days of purchase is taxed: 20% if sold within 365 days, falling to zero at 730 days. A return is due within 90 days of the sale. (Province of BC, Home Flipping Tax)
Property Transfer Tax
1% on the first $200,000, 2% up to $2 million, 3% above $2 million, plus 2% on residential value over $3 million. Foreign buyers pay an additional 20% in the Central Okanagan Regional District. (Province of BC, Property Transfer Tax)
Federal rules
The Underused Housing Tax has been eliminated from the 2025 calendar year on (returns for 2022 to 2024 are still owed). The federal ban on most non-Canadians buying residential property currently runs to January 1, 2027. (Government of Canada)
Where the numbers stand in the Central Okanagan
In August 2026 the Association of Interior REALTORS reported a single-family benchmark price of $1,056,700, a townhouse benchmark of $698,600 and a condo/apartment benchmark of $465,700 for the Central Okanagan, with 327 residential sales in the month. For the full picture, see my Kelowna real estate market update.
How I help investors
- Market analysis built from real-time data, so you know what a property and its rent are actually worth before you offer.
- Local knowledge across Kelowna’s neighbourhoods, from Lower Mission and Glenmore to Upper Mission and Black Mountain, including which areas suit suites, carriage houses or condos.
- Transaction management from offer to completion, and introductions to the accountant, lawyer or lender you need for the tax side.
- If you are selling an investment property, the same pricing and marketing approach I use for every listing.
Thinking about a rental, a suite or a multi-unit lot in Kelowna? Let’s talk through the numbers.
Frequently asked questions
Can I run an Airbnb in a Kelowna investment condo?
How many units can I build on a Kelowna lot?
Is Kelowna subject to the speculation and vacancy tax?
How much can I raise the rent on a Kelowna rental?
What is the rental vacancy rate in Kelowna?
Information current as of October 2026 from the sources named above. This is general information, not tax, legal or financial advice.
