Whether it’s your first foray into commercial real estate or you’re looking for specific information on leasing, buying, or selling commercial properties in Ontario, you’ll find lots of great insights in this blog post.
Commercial and residential real estate may sound similar on paper, but they’re more different than some investors may realize; and understanding the distinct traits of the commercial realm can prove invaluable if you’re preparing for the market.
Keep reading to explore four major differences between residential and commercial real estate.
We cover a lot of basic information in this blog. However, there’s no substitute for personalized guidance when it comes to commercial real estate. Get in touch with us to find out how these pointers may impact your personal goals.
1 It’s a Different Industry (With Different Agents)
The first thing you need to know about commercial real estate is that it’s its own thing. That might sound obvious, but not everyone realizes just how separate commercial and residential real estate are.
Not only are the properties completely different, but the clientele, transaction types, and legal variables can vary drastically from one world to the other. So, what does that mean for you?
If you’re thinking about leasing, buying, or selling a piece of commercial property, you’ll want to work with a specialized commercial real estate agent who understands the industry’s unique nuances.
Some agents work in both the commercial and residential fields. You’ll want to do your research before picking the professional you want to work with.
2 Transactions Take Longer
Another big difference between commercial and residential real estate is that the transactions usually take much longer.
Buying or selling a house takes time, but commercial real estate is a whole other ball game. Transactions can take several months to complete because there are simply so many financial and legal complexities to navigate. You’ll want to be ready for a long haul if you’re heading to the market.
This is a great example of why it’s so important to choose an agent who specializes in commercial real estate. Their specific insights and expertise will help you manage a smooth, efficient transaction.
On the hunt for residential real estate advice? Read these related blog posts next!
- Can an Open House Help Sell Your Home?
- Should I Renovate My Home Before Selling It?
- Why You Should Choose Your Asking Price Wisely
3 Property Taxes Are Higher
If you own a house, you know just how significant property taxes can be. As an annual expense, they’re something you need to budget for carefully. The same goes for owning a piece of commercial real estate. But there’s a catch: property tax rates are often significantly higher for these properties.
Like residential homes, commercial real estate property taxes are levied by the municipality and calculated based on the assessed value of the property and the designated tax rate.
To that end, the tax rate applied to commercial properties can be between 2 and 3 times higher compared to residential homes, depending on where you are in the province.
For example, Toronto’s 2026 commercial property tax rate is 2.301986%. That’s roughly triple the residential rate of 0.767311%.
It’s not just property taxes either. There’s a big difference between how (and when) Harmonized Sales Taxes apply to residential and commercial real estate transactions.
For example, most residential home purchases in Ontario aren’t subject to HST (with the critical exception of new-build properties, although rebates may apply). However, HST is far more common in the commercial real estate world. In Ontario, both the purchase and lease of commercial properties are subject to HST, which is the responsibility of the buyer or lender.
4 Financing & Loans
Just like buying a house, commercial real estate investments often require financing. However, this typically looks different from your traditional residential real estate mortgage.
In addition to business loans, lines of credit, and even government programs, investors may have access to other types of financial support depending on their plans and goals. For example, sourcing capital (and other resources) from other entrepreneurs or third-party investors.
Work With Bosley Commercial
Buying or selling commercial property in Ontario? Bosley Real Estate can help you reach your goals with ease.
As a brokerage serving the commercial market for close to a century, we train our agents with the most experienced in the industry and give them access to decades of market data to support investors of every kind. Our experience also means we’re able to connect our clients with unique investments, including off-market and pre-market opportunities.
Searching for commercial real estate guidance? Send us an email at info@bosleyrealestate.com or call 416-322-8000.
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