Refinance Rental Property

[leroy]

first of all, want to thank all the members of this forum, I have been looking for something like this and just recently stumbled upon it.

I live in BC, I bought a place 3 years ago, it has went up by approx 150k. 3 months ago, I accepted a job offer in a different city and relocated. At this time I decided to rent my primary residence out. It is currently generating positive cashflow. I am currently renting a condo.

My dilema is this:
I want to buy a primary residence. I plan on refinancing my rental unit to purchase my new residence as to avoid cmhc and all that fun stuff. Is there any way that I can "work" the deal so that I can write off the interest on the refinancing against the rental income?

If I was smart, I would have refinanced before I moved... not sure if it`s too late or if there is another way around my situation...

Alternatively, I am considering just selling my current rental unit and buying a bigger house with a rental suite.... this way I can write off more interest.

Any help would be appreciated.

Thanks

 

[Dejavu]

QUOTE (leroy @ May 6 2008, 01:11 AM) first of all, want to thank all the members of this forum, I have been looking for something like this and just recently stumbled upon it.

I live in BC, I bought a place 3 years ago, it has went up by approx 150k. 3 months ago, I accepted a job offer in a different city and relocated. At this time I decided to rent my primary residence out. It is currently generating positive cashflow. I am currently renting a condo.

My dilema is this:
I want to buy a primary residence. I plan on refinancing my rental unit to purchase my new residence as to avoid cmhc and all that fun stuff. Is there any way that I can "work" the deal so that I can write off the interest on the refinancing against the rental income?

If I was smart, I would have refinanced before I moved... not sure if it`s too late or if there is another way around my situation...

Alternatively, I am considering just selling my current rental unit and buying a bigger house with a rental suite.... this way I can write off more interest.

Any help would be appreciated.

Thanks

I am not a tax expert but from my research on the subject...you can only write off interest if you refinance to purchase an investments. If you refinance to purchase a new primary residence, the interest will not be tax deductable.

you probably thought about it already...Will the property cash-flow after you refinance? If yes, it may be worth keeping the property while using the money to put down on a new principle residence.

 

[leroy]

QUOTE (Dejavu @ May 6 2008, 07:51 PM) I am not a tax expert but from my research on the subject...you can only write off interest if you refinance to purchase an investments. If you refinance to purchase a new primary residence, the interest will not be tax deductable.

you probably thought about it already...Will the property cash-flow after you refinance? If yes, it may be worth keeping the property while using the money to put down on a new principle residence.

After refi, the property will not have positive cashflow. I am guessing this pushes me in the favor of selling the place unfortunately... would be nice to avoid the hasle and keep it.

 

[Nir]

Think about it this way: if you sell you will use the money to buy many properties that generate positive cash flow with only 10% down and make sense based on the REIN system. not bad, right? Good luck!