If you’re planning a purpose-built rental project in Kelowna, property taxes can have a major impact on long-term cash flow. The City of Kelowna Rental Housing Tax Exemption reduces that burden by offering a multi-year municipal tax break for qualifying rental developments. This incentive is designed to increase rental supply while improving project viability for developers.
The Kelowna – Housing Incentive: Rental Housing Tax Exemption is a municipal incentive that provides a 100% exemption from municipal property taxes on the assessed value of building improvements for eligible purpose-built rental housing projects.
Key features include:
Unlike a cash grant, the value of this incentive depends on your project’s assessed value and Kelowna’s municipal tax rates. For larger multi-unit developments, the savings can be significant over time.
To qualify for the City of Kelowna Rental Housing Tax Exemption, your project must meet municipal eligibility criteria set by the City.
Eligible applicants typically include:
Important eligibility details:
If tenure changes during the exemption period, the City may cancel the tax relief and recover forgone taxes.
Approved projects receive a 10-year municipal property tax exemption on the assessed improvement value.
During this period:
This structure helps reduce operating costs during the most financially sensitive years of a rental project.
You must apply through the City of Kelowna. The City approves applications by bylaw.
Typical application steps include:
Project planning and pre-application review
Make sure your project meets rental housing criteria and zoning requirements.
Submit a municipal application
Applications are made through the City’s developer incentive process, often alongside development approvals.
City review and Council approval
City staff check eligibility and prepare a recommendation for Kelowna City Council.
Revitalization Tax Exemption Bylaw adoption
If approved, Council adopts a bylaw confirming the exemption terms.
Because approvals are discretionary, aligning your project with City housing goals early is important. Tools like GrantHub’s eligibility matcher can help you filter municipal housing incentives by province and project type in seconds.
There is no fixed funding cap or grant amount.
The value depends on:
For example, a multi-million-dollar rental building can see six- or seven-figure tax savings over a decade, depending on assessment outcomes.
Assuming land value is exempt
Only the increase in assessed value from building improvements qualifies.
Changing unit tenure too early
Converting rental units to strata can trigger cancellation of the exemption.
Applying too late in the development process
The exemption must be approved through a bylaw. It is not automatic after construction.
Ignoring other stacked incentives
Some projects may combine tax exemptions with other municipal or provincial housing programs, where permitted.
Q: Does the Kelowna Rental Housing Tax Exemption cover school taxes?
No. The exemption applies only to the municipal portion of property taxes. School and other provincial taxes still apply.
Q: Is the tax exemption considered taxable income?
Municipal tax exemptions are generally not treated as direct income, but tax treatment can vary. You should confirm with a qualified tax advisor.
Q: Can mixed-use buildings qualify?
Yes, in many cases. Only the purpose-built rental residential portion is eligible for the exemption.
Q: Is this incentive still open?
Yes. The program is currently open, subject to City approval and Council discretion.
Q: Can non-profit housing providers apply?
Yes. Both private and non-profit developers may be eligible if the project meets City criteria.
The City of Kelowna Rental Housing Tax Exemption can materially improve the long-term economics of a rental project, but only if you apply at the right stage and meet all municipal conditions. GrantHub tracks active housing and municipal incentive programs across Canada, making it easier to see which tax exemptions and grants fit your development plans before you commit.
Was this article helpful?
Rate it so we can improve our content.
Canada Proactive Disclosure Data
The Canadian government has funded over 400,000 businesses through 1.27 million grants and contributions. Check your eligibility in 60 seconds.