Need Appraisal or not?

[23994]

Hi,

we have lived in our house for the past 13 years and are going to move to new place,we are planning to make the current one as our investment property after that...

My question is whether we should have a home appraisal for the current house to convert it from primary to rental or not? somebody said there is No need to do it as when we eventually sell it, the capital gain will be evenly divided by years e.g. if total is $100,000 gain for 5 years, each year will be $20,000, and if there are 2 years for rental, then the gain is $40,000 in total...

Appreciated for your sharing!

Sue

 

[Thomas Beyer]

You need some third party opinion of value, say a tax assessment or realtor opinion or appraisal as you will have to pay capital gains taxes from the date it was a rental property to sale, and also to calculate CCA.

So if you bought for $200,000 and now it is worth $350,000 and then a rental property until you sell at $400,000 you need some evidence for the $50,000 taxable capital gain. An appraisal is cheap, roughly $750 to less than $1000. An adjusted tax assessment will do ( say 10% above tax assessment ) or a written realtor opinion or comps.

 

[23994]

Thanks Thomas, will get appraisal then...but normally, the appraisal will come much less than the market value though.

 

[Thomas Beyer]

Appraisal are supposed to reflect market. Only tax assessments tend to be about 10% below market.

 

[Rickson9]

I would get an appraisal. My offers are contingent upon an appraisal. There are different types of appraisals (e.g. value approach, income approach) and different appraisal reasons (e.g. for purchase, for refinance, investment decision) I use the one that gives me some leverage during negotiations.

 

[Quantized]

Thanks Thomas, will get appraisal then...but normally, the appraisal will come much less than the market value though.

I have not found this to be the case. I have had 3 appraisals done in the last few months. Even in the rapidly changing Durham region here in Ontario the appraisals have kept up with market values. After all, the appraisers use recent transactions of similar properties to come up with their appraisal value.

 

[JerryCharlton]

Free Home Evaluations are available from every Realtor in the country - check a few Realtor websites close to you.

 

[REInvestors888]

Still depends on appraiser whether ultra conservative or not. I'd recommend get market valuation from your realtor friend and compare with appraisal. I would question the wide disparity in values.