# Got an offer on my house that's hard to resist, but am I making the right decision?



## plaza (Sep 16, 2010)

We had put our house up for sell just to test the waters. We bought it 3 years ago for 400k and put about 125k in renos. We put it on the market at 800k and we got an offer of 775k but with move out in 60 days. The money is great but moving out in 60 days with a wife and four kids is really stressfull since we have not bought anything else. We also have tons of furniture which is another headache and will have to pay storage of $400-500/month.

We are looking for another fixer upper, but the market is crazy and not sure we will find one that we can make that much $$. If we do buy now and the market drops then we made on one but lost on another. 

We still have to go through inspection, but if it goes through we will be one of or the highest sold home in the area, which is why it is so hard to refuse. 

Are we making the right choice? if so, how many people think the market will drop in 2011. Should we hold off on buying another and rent for now?


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## Addy (Mar 12, 2010)

I would start looking at rentals but still keep an eye out for fixxer uppers. Then at least you have rental property secured.


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## Four Pillars (Apr 5, 2009)

If you don't want to move, then don't sell the house?

I really can't understand why you would put the house up for sale, if you aren't serious about selling it - makes no sense at all.

And yes - if you get a "great offer" on your house - guess what? It will take an equivalent "great offer" to buy another house. Your house isn't special - the market just went up a lot.


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## marina628 (Dec 14, 2010)

I would sell , take the money and Rent until you find next fixer upper.If you rent for a year you are flexible to buy any time.Congrats on your success ,some people end up doing this for a living.My friend buys and sells houses but he usually lives in the house for a year then sells.He is single and can move his entire house in one small truck lol .He only furnishes kitchen ,living room and one bedroom.He has to keep the houses a year and live in them for some tax reason.


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## DavidJD (Sep 27, 2009)

If it is worth $775K on the market today - what would it be worth in 18 months? 

Start looking for your fixer-upper in the meantime. If you hava a place to land, and a better offer comes along that wants you out in 60 days you can do it.

If your kids are in school you may want to focus your area to cause minimal upheaval. You may indeed prove your teens correct that you hate them and are trying to ruin their lives


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## jamesbe (May 8, 2010)

Almost sounds like you didn't actually expect to sell, so you weren't really putting it on the market.

You put your house for sale, one would think you expected to sell it. Therefore had a plan if you did.

I'd sell, that's good coin there, store some furniture (shouldn't be $400/500 a month for storage that seems very high). Find someplace to buy or rent while you are looking.

If the market goes down, awesome, if it goes up doesn't really matter much you only lose the equity you would have gained.

There is a house in my neighbourhood that the owners are obviously in the same situation as you were, they put their house up for sale $150k over what seems realistic and it has been on the market now for 3 years.... I guess eventually they will get their price haha.


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## Ethan (Aug 8, 2010)

marina628 said:


> He has to keep the houses a year and live in them for some tax reason.


You need to live in the house for 1 year in order to receive the principal residence exemption. Any gains on the sale of your principal residence are not taxable. For someone renovating and flipping houses this can result in substantial savings.


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## iherald (Apr 18, 2009)

Ethan said:


> You need to live in the house for 1 year in order to receive the principal residence exemption. Any gains on the sale of your principal residence are not taxable. For someone renovating and flipping houses this can result in substantial savings.


That's not true. It rule is number of years you've lived there + 1. So, if you've lived there for 1 day, you get the +1. However, if you continue to sell all the time, eventually the government will say it's a business.


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## K-133 (Apr 30, 2010)

iherald said:


> That's not true. It rule is number of years you've lived there + 1. So, if you've lived there for 1 day, you get the +1. However, if you continue to sell all the time, eventually the government will say it's a business.


This is more correct.

CRA basis the 'exemption' on intent. If your situation has changed and you did not intend to make money, and can demonstrate that, then you will be 'exempted'.

Its fairly fuzzy though, and difficult to demonstrate.


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## Cal (Jun 17, 2009)

plaza said:


> We had put our house up for sell just to test the waters. We bought it 3 years ago for 400k and put about 125k in renos. We put it on the market at 800k and we got an offer of 775k but with move out in 60 days. The money is great but moving out in 60 days with a wife and four kids is really stressfull since we have not bought anything else. We also have tons of furniture which is another headache and will have to pay storage of $400-500/month.
> 
> We are looking for another fixer upper, but the market is crazy and not sure we will find one that we can make that much $$. If we do buy now and the market drops then we made on one but lost on another.
> 
> ...


Whether the market drops or not, or whether you can find another house to make money one, you potentially just made $250K on this one. Ultimately it is your decision as to stay in the current house or not.


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## Plugging Along (Jan 3, 2011)

K-133 said:


> This is more correct.
> 
> CRA basis the 'exemption' on intent. If your situation has changed and you did not intend to make money, and can demonstrate that, then you will be 'exempted'.
> 
> Its fairly fuzzy though, and difficult to demonstrate.



One of our friends was in a similar situation as the OP. They bought a house, and wanted to 'just see' what they could get for on the market (wife did NOT want to sell, she was 8 months pregnant). They put the offer rather high, and then got what they asked for with a 45 day close. My friend saw the $$$$, and closed the deal. They found a house, painted, cleaned it up, and moved in. A few months later, wife got a job offer she couldn't refuse in another city making more than both of them together. The sold the second house at a really large profit. 

They got audited, and had to show records of employment, the offer letter, and some other really strange things. They did get the second capital gains exemption.

I think it really comes down to intent.


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## dogcom (May 23, 2009)

We are talking about a principal residence, which means it is something you don't just play with. Unless you are planning to move to a different province or area farther away then you might just be trading one house for another and have to pay all the fees. Why does everyone look at their house price like it is some kind of stock that has gone up a lot.

You have also renovated your house and you know what shape it is in. What happens if you buy something else and it requires a lot more money and work then you thought even after you had it inspected. This is not some kind of game and you have a big family to worry about. House prices may drop hard at some point so if you want to roll the dice and your wife doesn't mind the turmoil then buy a townhouse and wait for it. But keep in mind if it doesn't go the way you think then you will have to pay a lot more to move back up again.


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## Sherlock (Apr 18, 2010)

So if your intent was simply to make a profit on the house and you're honest about that to the government, how much tax do you pay on your profit? Are there any other penalties other than the tax?


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## dogcom (May 23, 2009)

I forgot to say Four Pillars gets it and all I did was explain what he said.


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## Four Pillars (Apr 5, 2009)

dogcom said:


> I forgot to say Four Pillars gets it and all I did was explain what he said.


Thanks - you said it in a much nicer way. 

One other factor is the buyer - it can be a lot of effort, stress to put an offer in on a house. I realize it has nothing to do with $$, but it doesn't seem fair to be playing games like this.


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## plaza (Sep 16, 2010)

I don't think it's only because the market went up. It's because I renovated it well and people that could not afford the 1million + neighbourhood were happy to see mine. The home across me is bigger and he had it listed for 595k and could not get an offer. The neighbours and agents thought I was crazy to list it at that price but many will be surprised to see it sold.

You are right in one way that we are a larger family, and I have a townhome already which I usually rent, but through a tenant out two months ago because he was not paying and have not found the right renter yet, so I might just keep it for us. It is really small.. less than 1/2 of our current one, but at least we have that in case we don't find somethign else to buy by move-out date


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## 412driver (Apr 30, 2010)

sell....invest the 250k wisely and it should cover a big chunk of your rent.


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## Plugging Along (Jan 3, 2011)

Sherlock said:


> So if your intent was simply to make a profit on the house and you're honest about that to the government, how much tax do you pay on your profit? Are there any other penalties other than the tax?


You just pay tax on the full amount. You will be allowed the capital gains exemption which is 50% of the profit.


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## the-royal-mail (Dec 11, 2009)

412driver said:


> sell....invest the 250k wisely and it should cover a big chunk of your rent.


I think I need to disagree with this. For someone who has $250K equity saved, and is relatively young, renting will be the best way to burn through that equity and lower their networth.

In addition, finding a suitable replacement place to rent won't be as easy as suggested. Renting a house from someone puts you at risk (and added cost) of needing to move anytime, due to them deciding to sell one day. Finding a good rental is not easy.


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