How much capital should I aim to recover in a BRRRR project?

The common target is to keep the total project cost, that is purchase plus work, at 75% of the ARV or less. That lets you recover almost all of your outlay after refinancing at 80%.

Does refinancing a BRRRR trigger tax?

No. Refinancing is borrowing: there's no disposition, so no capital gain or recapture of CCA at that point. Tax will be triggered only if, and when, you actually sell the building.

DeedWorthGuide · Quebec

The BRRRR Strategy in Quebec: The Complete Guide to Building a Portfolio Without Tying Up Your Capital

Q: How much can I refinance a building for in Quebec?

A conventional mortgage refinance in Canada is capped at 80% of the property's market value. The re-extracted capital equals 80% of the new value, minus your remaining mortgage balance.

Q: What is ARV in the BRRRR strategy?

ARV (After Repair Value) is the estimated market value of the building after the renovations. It's the figure the entire refinancing calculation rests on; securing it with reliable comparables is the most critical step.

Most BRRRR content in English is written for the U.S. market — with its own rules, taxation, and financing. In Quebec, the mechanics work, but the numbers and constraints are different: refinancing capped at 80%, welcome tax, the anti-flip rule, capital cost allowance. This guide adapts the BRRRR strategy to the Quebec reality of 2026.

What exactly is BRRRR?

BRRRR is the acronym for five steps repeated in a loop:

Buy — acquire a building below its market value, usually because it needs work.
Rehab — carry out renovations that increase both the resale value and the rent collected.
Rent — put it on the market at market conditions.
Refinance — refinance the building at its new value to recover the capital invested.
Repeat — reinject that capital into the next building.

The core idea: instead of locking a down payment into each property, you recover it through refinancing and put it back to work. Executed well, the strategy lets you build a portfolio with limited starting capital — hence the phrase "infinite return" when the re-extracted capital covers the entire initial outlay.

The key step in Quebec: refinancing at 80%

This is where the Quebec (and Canadian) reality imposes its limits. In Canada, a conventional mortgage refinance is capped at 80% of the property's market value. You can't refinance beyond that; it's the rule that frames the entire strategy.

The capital you can re-extract is calculated as follows:

Re-extracted capital = (80% × new market value) − current mortgage balance

Illustrative example:

Purchase of a building to renovate: $350,000
Work: $50,000 → total project cost: $400,000
Estimated after-repair value (ARV): $500,000
Refinance at 80%: 0.80 × $500,000 = $400,000 of possible new loan

If your mortgage balance at the time of refinancing is, say, $280,000, you can re-extract up to $400,000 − $280,000 = $120,000. That amount goes back into your pocket (tax-free, because it's a loan, not income) to fund the next project.

The practitioners' golden rule: aim for a total project cost (purchase + work) at or below about 75% of the ARV. That's the threshold that lets you recover almost all of your capital after refinancing at 80%. Beyond that, part of your outlay stays "stuck" in the building.

The Quebec specifics to build into the calculation

Four elements specific to Quebec make the difference between a theoretical projection and the real return:

1. The welcome tax (land transfer duties). On purchase, you pay transfer duties calculated in brackets on the tax base (the greater of the price or the roll value). In Montreal, a base of $700,000 already represents nearly $9,350 in duties, and a 3% municipal surtax applies to the portion above $2M. This acquisition cost adds to your project and must be budgeted.

2. The 365-day anti-flip rule. Since January 1, 2023, reselling a residential property held less than 12 months has the profit taxed as business income at 100%. But BRRRR isn't a flip: the strategy is to keep the building and rent it, not resell it. You refinance (you borrow), you don't sell — so there's no taxable disposition at refinancing. It's one of BRRRR's big tax advantages over flipping.

3. Capital cost allowance (CCA). Once the building is rented, you can depreciate the building (Class 1, 4% per year) to reduce taxable rental income. Watch out, however, for recapture of CCA on the day you eventually sell: the CCA claimed becomes taxable at 100% again (see our guide on recapture of CCA). As long as you keep and refinance, it isn't an issue; it becomes one at exit.

4. The stress test and rates. Refinancing puts you through mortgage qualification again (the stress test). The rent increase achieved through the renovations improves your ratios, but borrowing capacity remains constrained. Renewals at rates higher than at purchase must be stress-tested in your projection.

The number-one risk: the after-repair value (ARV)

The whole strategy rests on one assumption: that the building will really be worth the estimated ARV after the work. If the appraisal at refinancing comes in lower than expected, the re-extracted amount shrinks, and part of your capital stays locked in.

Three precautions:

Source the ARV from real comparables in the neighbourhood, not from renovator optimism.
Budget for cost overruns (a 10-20% cushion); projects rarely hold the initial budget to the dollar.
Set aside carrying costs (interest, taxes, insurance) during the work period when the building generates little or no rent.

Why model BRRRR before buying

A BRRRR project chains together variables that ripple into one another: purchase price, work budget, carrying costs, ARV, refinancing conditions, post-renovation rent, cash flow after refinancing. A single overly optimistic assumption — an inflated ARV, an underestimated work budget — and the "infinite return" becomes trapped capital.

The DeedWorth BRRRR module models exactly this chain: it computes the capital re-extracted at 80% refinancing, the post-refinancing cash flow, the capital that may remain tied up, and the project's real return — factoring in Quebec acquisition costs. You test your ARV and work assumptions before signing, not after. Model a BRRRR project with DeedWorth →

FAQ

Is BRRRR legal and tax-advantageous in Quebec? Yes. BRRRR involves keeping and renting the building, not reselling it quickly; it therefore escapes the 365-day anti-flip rule. The capital re-extracted at refinancing is a loan, not income — it isn't taxable.

How much can I refinance? A conventional refinance in Canada is capped at 80% of the property's market value. The re-extracted capital equals 80% of the new value, minus your remaining mortgage balance.

What is ARV? The After Repair Value, i.e. the estimated market value of the building after the renovations. It's the figure the entire refinancing calculation rests on; securing it with reliable comparables is the most critical step.

How much capital should I aim to recover? The common target is to keep the total project cost (purchase + work) at 75% of the ARV or less, which lets you recover almost all of your outlay after refinancing at 80%.

Does BRRRR trigger tax at refinancing? No. Refinancing is borrowing: there's no disposition, so no capital gain or recapture of CCA at that point. Tax on recapture and the gain is triggered only if — and when — you actually sell.