Q: We own our home outright and it is valued around $850,000. We are considering holding our home as a revenue property and have been told it can rent for $3,500-4,000; and buying a new condo around the $1 million mark. We can qualify for the condo value. What are the implications of holding or selling?
A: Good Question! The gain in equity on your personal residence has been tax free and will be until you switch it over to a rental property. If you choose to hang on to it you have to notify Canada Revenue Agency. I would discuss the nuts and bolts with an accountant but basically come up with a value for the property on the date you move into your new condo. Any subsequent gain in value will be subject to capital gains tax after that date.
The main question to ask yourselves will be: “is the $850,000 house a good investment or would it be better to buy a different type of revenue property?”
The tricky part of the transaction if you decide to keep the house is how can you make your new mortgage tax deductible. Talk to your accountant to see if you can borrow money against the revenue property and be able to write off the interest against rental income if you use the funds to buy your new condo. I don’t think you can do this. You may have to sell the house, pay for the condo with cash, and then take out a mortgage for a downpayment on a revenue property. Only then do you have the proper trail to claim the interest as an investment expense.
I think you are on the right track. Good luck!
here is the real deal. Pay one tenth of the balance of the cridet card and you will be debt free in one year. 1. Start with the lowest card. estimate if you can pay off this card in a short period of time. 2. Maintain payments to the other cards. 3. Don’t charge any more.. 4. When you pay all your cridet cards what is the total you can pay per month? 5. Keep paying the same amount to the higher cards, but pay as quickly on the lower amounts. 6. As you pay off one card after another, you can put more into paying the smallest debt quickly. 7. This only applies to cards with the same interest per month. If one card is at 30% and another is at 12% , you must concentrate on the card with the higher interest rate. 8. Good luck. 9. Go buy a home using the cash you now have.