Prices, Price Factors and 2026 Programs
Furnace replacement cost in Canada: gas, oil and electric furnaces compared
What a furnace replacement quote includes in Canada, how size, efficiency, venting and gas work change the price, and when replacing with a heat pump is worth pricing too.
A furnace replacement in Canada is usually the lowest-upfront-cost way to replace failing heat, but the quote still varies widely with the furnace's output, its efficiency and blower type, the venting the new unit needs, and how much gas, electrical and duct work comes with it. As an illustration only, a 60,000 BTU/h high-efficiency gas furnace (about 4.75 tons of output at 95%) priced at $1,100–$1,900 per ton of output with $800 of venting and permit extras would come to roughly $6,000–$9,800 before tax. Oil furnaces generally cost more to install, and electric furnaces cost less to buy but the most to run.
This guide is part of the heat pump installation cost overview. Prices are illustrative, not quotes.
What sits inside a furnace quote
| Line | What it covers | Typical questions to ask |
|---|---|---|
| Furnace unit | Burner, heat exchanger, blower, controls | Output BTU/h, AFUE, single-stage, two-stage or modulating, ECM blower |
| Venting | PVC intake and exhaust for condensing units, or chimney liner | Is the old chimney being abandoned? Who handles an orphaned water heater? |
| Gas work | Reconnection, gas line resizing if needed, leak test | Done by a certified gas technician; permit or registration |
| Condensate | Drain line, neutralizer, pump if no floor drain | Freeze protection if routed outside |
| Ductwork | Transition pieces, return air, filter rack | Static pressure test results |
| Removal | Old unit, disposal | Asbestos tape on old ducts needs special handling |
| Thermostat and commissioning | New thermostat, combustion analysis, start-up | Written start-up report |
Efficiency: what the AFUE number means for your bill
AFUE (annual fuel utilization efficiency) is the share of the fuel's energy that ends up as heat in the house over a season. Under the federal Energy Efficiency Regulations, 2016 (administered by Natural Resources Canada), most residential gas furnaces (input up to 225,000 BTU/h, single-phase, no integrated cooling) manufactured on or after 3 July 2019 must have an AFUE of at least 95%, which in practice means condensing units. Narrow exceptions, such as replacement non-condensing furnaces and furnaces for relocatable buildings, have an 80% minimum. Check NRCan for the current minimum.
A condensing furnace needs plastic venting through a side wall or roof and a condensate drain. If your old mid-efficiency furnace shared a chimney with a gas water heater, removing it can leave the water heater's venting oversized ("orphaned"), which must be corrected. That is a common extra in older homes.
Blower and staging. Two-stage and modulating furnaces run at low output most of the winter, which is quieter and evens out temperatures. An ECM (variable-speed) blower uses less electricity. These features add to the price, and their value grows if you later pair the furnace with a heat pump coil.
Worked example: two gas furnace quotes
Illustrative figures for a home with a measured heat loss of 42,000 BTU/h.
| Quote A | Quote B | |
|---|---|---|
| Furnace | 80,000 BTU/h input, single-stage | 60,000 BTU/h input, two-stage, ECM blower |
| Output at 96% | 76,800 BTU/h | 57,600 BTU/h |
| Price before tax | $5,900 | $6,700 |
| Venting and condensate | included | included |
| Water heater vent correction | not mentioned | $450 |
| Total before tax | $5,900 | $7,150 |
Quote A looks $1,250 cheaper. But its output is 76,800 ÷ 42,000 ≈ 1.8 times the heat loss, so it will short-cycle, which is hard on the heat exchanger and uncomfortable. It also did not mention the orphaned water heater vent, which will need correcting anyway, so the real gap is $1,250 − $450 = $800. Ask Quote A to resize and itemize; see how to compare HVAC quotes.
Oil and electric furnaces
Oil furnaces. Replacement often includes a tank inspection; many insurers ask about tank age and may require replacement after a certain age. A new tank, or removing the tank as part of a conversion, can add significantly to the cost. If you are already paying for a new tank, price an oil-to-heat-pump conversion before deciding. Installation must follow CSA B139 and provincial fuel oil rules.
Electric furnaces. These are simple and cheap to install, but every kilowatt-hour of electricity gives one kilowatt-hour of heat. Adding a heat pump to an electric furnace typically cuts electricity use for heat substantially, which is why programs have focused on electrically heated homes.
Propane furnaces. Similar to gas furnaces in installation, but propane prices per unit of heat are usually higher than natural gas.
If the home has radiators rather than ducts, the equivalent decision is covered in boiler replacement costs, and the heat pump alternatives are priced in cold-climate heat pump price factors.
Replace the furnace, add a heat pump, or both?
If your air conditioner is also near the end of its life, pricing a heat pump instead of a new air conditioner is often the cheapest way to add low-carbon heat while keeping the furnace as backup; see hybrid dual-fuel systems. If the furnace is failing but the AC is new, a furnace-only replacement may be sensible now, with a heat pump later. The running-cost comparison shows how to test each option with your own rates.
Licensing, permits and tax
Gas furnace installation must be done by a certified gas technician or gas fitter, for example a TSSA-certified technician working for a registered contractor in Ontario or a Technical Safety BC licensed gas contractor. See permits and licensed technicians. In British Columbia, fossil fuel heating systems carry PST at 12% instead of 7%; see GST/HST and PST on HVAC installation.
Mistakes to avoid
- Sizing by the old furnace's label. Many older furnaces were oversized.
- Ignoring static pressure. A high-efficiency furnace on restrictive ducts can be noisy and inefficient.
- Signing a rental contract presented as "no money down" without comparing it to buying. See rental contracts.
- Forgetting warranty registration, which some manufacturers require within a set period. See warranty registration.
FAQ
How long does a furnace last?
Many last 15 to 20 years or more with maintenance, but cracked heat exchangers, repeated ignition failures or parts that are no longer available often end their life earlier.
Is a furnace replacement eligible for a rebate in 2026?
Gas furnace replacements are generally not the focus of current federal or provincial programs, which favour heat pumps and envelope upgrades. Check your utility for any current offer.
Should I replace the AC at the same time?
If the AC is old, replacing both together saves a second visit and lets the indoor coil match the new furnace. Consider a heat pump instead of a new AC.
Sources
- Natural Resources Canada — furnace efficiency regulations and EnerGuide information
- TSSA (Ontario) — gas technician certification and fuel safety
- Technical Safety BC — gas licences and permits in British Columbia
- CSA Group — CSA B149.1 gas and B139 oil installation codes
- Canada Revenue Agency — GST/HST
