# Short-term move and condo rental



## ernie77 (Jul 3, 2009)

For work reasons we may have to move from Toronto to another city for a year, maybe 2. We own a condo (well, 1/2 a condo!) in TO. I'm wondering if it is worthwhile (in terms of mental energy and $$) to rent the place out for a year while we're away. Ideally you get a great tenant, cover mortgage + fees plus a little extra. But maybe it is better to just suck up the costs and avoid the hassle of renting (expensive but only in terms of money).

Some questions:
-- what fees would I expect to pay to a company like Re/Max to manage the place?
-- what are the chances I get a tenant that damages my place or causes other problems? We have a 2BR in a decent building downtown.
-- what are the tax implications for my 'primary residence' deduction? I assume I would lose a year while I rented somewhere else.

thanks!


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

Good luck pricing it in a way that covers mortgage, fees + a little extra. You would have to have pretty low expenses to be able to pull that off. That math never worked for me. When I rented my condo out (similar situation to yours) I lost several hundred a month and had to chase the tenant (who started out ok) and fuss with eviction when they simply decided to stop paying the rent.

If it's not your primary residence, then you would be able to deduct certain expenses associated with the property if you were renting it out. It will make a complicated tax year. You are also responsible to repair things which break and that comes out of your pocket. 

Property management companies such as DEL work well, they have lots of experience but will charge a fee. IIRC my fee was around $150-200 a month. I don't think RE companies are interested in property management. I never had much luck with that. You need a specialist in residential property management.

And good luck selling the place while you have a tenant in there. It may be that you want to stay in the place you are moving to, which means you would need to sell from afar. Some tenants get agitated with the parade of RE agents bringing in prospective buyers and will try every trick in the book to get in their way. In their mind, they feel that selling the place means expense and hassle for them. They would usually prefer to stay.

IMO it's not worth the hassle, esp for short term.


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## balexis (Apr 4, 2009)

Landlording from far away is a recipe for trouble, if you decide to rent, make sure you have someone managing the property for you.

It sure will make a complicated tax year. Regarding the primary residence status, you will have to assess the value of the condo at the time it becomes a rental unit. When you come back, you will have to re-assess the unit and probably pay capital gains on the difference (if the unit's value increased).

Royal has a point, it will be harder to sell with a tenant than if empty.

If I were you, I'd contact 2 property management companies and ask how much they charge. Then, run the numbers to see how much you'd make, net of all fees, during every year you'll be away.

Don't forget that some fees are deductable (mortgage interest, property tax, management company fees, etc), while the rent checks are taxable as income.

The key here is to compare how much you'll make against the hassle and potential problems. Some people can't sleep at night if their tenant is late paying rent or causing trouble in the building, some are more business-oriented and can deal with it. Everyone is different.


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## Four Pillars (Apr 5, 2009)

According to this article, the rental market in Toronto is not very good, from the landlord's point of view:

http://www.moneyville.ca/article/993076--it-s-a-renters-market-as-new-condo-supply-expands?bn=1


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## I'm Howard (Oct 13, 2010)

balexis, I have the option to Rent our Primary Residance for three months in the Winter to a Ski Family, we go to Florida.

Can I deduct the costs associated with our Florida stay, Travel Expenses , Land Rental, utilities etc as I am assuming that if we did not incur these costs then we could not rent the place out?

The primary residence is vacant for six months, it it legal to say it is available for rent for six months, then deduct six months of taxes, snow removal, utilities??

We would use a Rental Agency.


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## MoneyGal (Apr 24, 2009)

balexis said:


> Regarding the primary residence status, you will have to assess the value of the condo at the time it becomes a rental unit. *When you come back, you will have to re-assess the unit and probably pay capital gains on the difference (if the unit's value increased)*.


The gain, if there is a gain, is only payable if and when the unit is sold, not when the OP comes back. 

But yes, the assessments should be done at the time of departure and the time of return - that's how the gain is calculated and the supporting documents you will need to present to CRA are generated. But the gain itself is not payable then. Make sense?


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## balexis (Apr 4, 2009)

@Howard: sorry, I don't know the answer to this one.

@MoneyGal: Thanx for clearing that up, I actually wasn't sure about when the CG was payable. It makes sense to have to pay it when the property is sold.


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## Cal (Jun 17, 2009)

Generally RE agents will charge you 1/2 of 1 months rent for finding you a tenant.

Best case scenario, you find someone yourself who you know to rent for a year or so.


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## Berubeland (Sep 6, 2009)

As some of you know I provide these kinds of services in the GTA. In the GTA you will pay a full month's rent for tenant location and 10% for management. 

I would not recommend a real estate agent to rent your property. OREA doesn't even have a legal residential lease or give the Tenant Information Package as required by law. Not that all of them are horrible, but you're better off getting an experienced rental agent or property management company. 

One company I used to work for that's decent is Speedy Rental Agency. They take their job seriously. Ask for Norma (She's had no evictions in like 10 years)


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## Karen (Jul 24, 2010)

I have a question: Since he would be moving for work purposes, if the OP sells his condo before moving, would he be able to deduct all his moving expenses, including the realtor fees, for income tax purposes?


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## Plugging Along (Jan 3, 2011)

If you are moving some where else, and do not have another principle residence, and move back with in 4 years. You do not have to pay capital gains, as long as you do not claim CCA during this time. I know this is true if you move over seas, but am not sure if you move within Canada. If you are planning to buy another place then it doesn't apply.

I can't speak of the market in TO, but I do know many people who have rented out the place, and felt it was really worth it. I've managed one for friend for a little while, before they decided to move, and it was pretty good. The market was hot at the time though. 

If you have extra stuff, you may want to rent out the place furnished or a a short term rental. However, it would need to be in the right location. Most furnished rentals are either near downtown, or are as executive places in nice areas not far from downtown, or near the Universities/colleges (though I wouldn't want to leave my stuff to students). My one friend had a nice condo near downtown, and it was very well kept. She had decent furnishings too. She hired a management company, and they were able to charge more because she was willing to do short term.

The fact that it was higher priced, really eliminated troublesome tenants.


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