GTA: buying a house, keep current condo or sell it? tax deductions on rental?
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Thread: GTA: buying a house, keep current condo or sell it? tax deductions on rental?

  1. #1
    Junior Member
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    Mar 2017
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    GTA: buying a house, keep current condo or sell it? tax deductions on rental?

    Hello,

    We are currently living in a condo (own) and are planning to buy a house. Our first renewal is in july. FMV of our condo today would be around 420k, and we have 90k left on the mortgage.

    I have a few questions on a couple of different scenarios and hope you can help us out:

    Here are the parameters:
    - Say the value of the house is around 900K. Our principle property will be the house.
    - We have 50K that we can use in scenario #1 below as part of down payment for the house.


    1. Scenario 1: Refinance the condo and put it on rent. Extract the equity and pay 20% down on the house.
    - So, say we refinance for 220K (at 2.30% for 5 years variable); payoff the existing mortgage on the condo (90K); and pay remaining 180K (20%) down on the house (130K+50K).
    - Rent on the condo (conservative figure): $1900
    - Maintenance fees + mortgage (P+I) + property taxes = 776+964+190 = $1,930
    - Q: In this scenario; can I get tax deductions off the interest/condo fees/taxes off the refinanced mortgage on the condo?


    2. Scenario 2: Sell the condo, buy the house with 20% down; and use the rest to buy an investment property at a later date and put it on rent.
    - Q: In this case as well; would we be able to get tax deductions off interest/condo fees etc?


    In general; does keeping the existing condo makes sense? Or should we sell it irrespectively? Is there any scenario under which we will get tax deductions when keeping the existing condo?

    Thanks.


  2. #2
    Senior Member
    Join Date
    Mar 2012
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    3,523
    The current condo doesn't make sense as an investment because it is worth too much on its own.

    A better bet would be to sell it, buy your house, get a heloc and purchase a property priced to be a rental using the heloc for the down payment. You could probably get 2-3 rentals for the price of your condo which would actually all cash flow instead of losing money every month on your current one.

    Note, your rentals probably won't be in the gta, but they'd actually be an investment that makes money.
    I'm not JustAGuy (without spaces), or Donald, or <insert name here>.

  3. #3
    Senior Member tygrus's Avatar
    Join Date
    Mar 2012
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    1,147
    Sell the condo then be the renter for the new owner and wait out the madness. You will buy that house a lot cheaper in 2020 I would bet.

    People in GTA are really clueless about whats brewing there.


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