On the blog: Principal Residence Exemption and CMHC Rules For Income From Secondary Suites
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Good article by George.
Sometimes, I find it hard to untangle the current investment opportunities for new home buyers from the unending amount of detail available in the marketplace. But just to clarify for a new home buyer who may be reading this post, I think this is the best strategy for Alberta personal residence and investment property (combined) in 2016, to my knowledge:
1. Save up for your investment home / personal residence using the RRSP Home Buyers' Plan. This allows you to draw up to $25,000 per person ($50,000 if married) from your RRSP's tax-free. Even if you are in the lowest income bracket, that is an additional 15% you get to save. So that is the same as a government-guaranteed 15% return on your money in my books. You have 15 years to repay these funds back into your RRSPs. The tax advantages described in the post can be pretty much summed up that you won't pay capital gains on your pro rata share but only deduct expenses on your pro rata share (to my understanding at least). Income is added to your personal income at 100% collected value.
2. Take advantage of local programs. In Alberta, CRHC has a program called "The HOME Program" where new home buyers can get a free $3,000 towards their down payment by attending a few night classes.
3. In Alberta, this is generally not the right time to develop a secondary suite...this is the year to buy good quality product that is already developed. So paying an addition $20,o00 or $30,000 for a property that was properly developed and maintained is a very worthwhile investment. It will cost you an additional $80 - $130 / month at today's rates. When you are saving up for your first down payment, a $5,000 furnace in your first months and $8,000 for shingles, and $1,600 for hot water tank is a major killer.
4. Incorporating is a waste of money. Don't do it. Purchase specific property insurance.
5. Pay "rent" into the property bank account just like you be paying rent if it were a house you were renting. The mortgage and all expenses come out of this fund. This is your fund for property repairs and maintenance and provides a cash check for the actual amount you are spending on the home.
Sometimes, I find it hard to untangle the current investment opportunities for new home buyers from the unending amount of detail available in the marketplace. But just to clarify for a new home buyer who may be reading this post, I think this is the best strategy for Alberta personal residence and investment property (combined) in 2016, to my knowledge:
1. Save up for your investment home / personal residence using the RRSP Home Buyers' Plan. This allows you to draw up to $25,000 per person ($50,000 if married) from your RRSP's tax-free. Even if you are in the lowest income bracket, that is an additional 15% you get to save. So that is the same as a government-guaranteed 15% return on your money in my books. You have 15 years to repay these funds back into your RRSPs. The tax advantages described in the post can be pretty much summed up that you won't pay capital gains on your pro rata share but only deduct expenses on your pro rata share (to my understanding at least). Income is added to your personal income at 100% collected value.
2. Take advantage of local programs. In Alberta, CRHC has a program called "The HOME Program" where new home buyers can get a free $3,000 towards their down payment by attending a few night classes.
3. In Alberta, this is generally not the right time to develop a secondary suite...this is the year to buy good quality product that is already developed. So paying an addition $20,o00 or $30,000 for a property that was properly developed and maintained is a very worthwhile investment. It will cost you an additional $80 - $130 / month at today's rates. When you are saving up for your first down payment, a $5,000 furnace in your first months and $8,000 for shingles, and $1,600 for hot water tank is a major killer.
4. Incorporating is a waste of money. Don't do it. Purchase specific property insurance.
5. Pay "rent" into the property bank account just like you be paying rent if it were a house you were renting. The mortgage and all expenses come out of this fund. This is your fund for property repairs and maintenance and provides a cash check for the actual amount you are spending on the home.
- Joined
- Dec 14, 2013
- Messages
- 980
Through CRHC: http://crhc.ca/programs-and-services/the-home-program.aspx
City of Edmonton First Places, brand new home (defer land payments for 5 years): http://www.edmonton.ca/programs_services/housing/first-place.aspx
City of Edmonton First Places, brand new home (defer land payments for 5 years): http://www.edmonton.ca/programs_services/housing/first-place.aspx