Hi Guys,
I am looking for some advice. I am planning to buy bigger home and would like to rent out my current home. I am looking for best and proper way to make my current residenstial property to investment property.
I would like to pay as much as downpayment for my new home and would like to borrow as much as for my old home (investment property).
For Example:
New Home Price: $400K
Current Home Price : $300K
Mortgage Remaining: $140K. I have total 160K for both houses. I would like to have $160K as downpayment for new home and then take $60K (from HELOC of new home) for down payment of old home (to claim interest on this $60K)
I am confuse about how to achieve it without selling my current home. OR Any alternative way?
Any idea?
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Success is Never Ending and Failure is Never Final.
Whatever you do, maintain proper paper trail.
CRA can come after to audit your the details for clarification.
Thanks but the question is how to proceed to satisfy the CRA requirement?
There is nothing wrong for claiming interest against downpayment of Investment property.
Any one knows step by step better process for this one?
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Success is Never Ending and Failure is Never Final.
MY LOGIC IS VERY SIMPLE. YOU WILL HAVE TO DO THE MATH.
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Quote:
Originally posted by meitsme
Hi Guys,
I am looking for some advice. I am planning to buy bigger home and would like to rent out my current home. I am looking for best and proper way to make my current residenstial property to investment property.
I would like to pay as much as downpayment for my new home and would like to borrow as much as for my old home (investment property).
For Example:
New Home Price: $400K
Current Home Price : $300K
Mortgage Remaining: $140K. I have total 160K for both houses. I would like to have $160K as downpayment for new home and then take $60K (from HELOC of new home) for down payment of old home (to claim interest on this $60K)
I am confuse about how to achieve it without selling my current home. OR Any alternative way?
Any idea?
Thanks FH.
What about claiming interest on $60K (20% down payment on old house - rental property)?
How can I claim it and what kind of proof I have to maintain for CRA?
I never invested in stock. Didn't notice much growth in mutual fund. I am interesting in investment in real estate. I believe real estate is good investment (less risky) for long term. Everyone has different view and different risk taking capacity.
I got really good deal for this new home. For current market value, I would never able to buy this new home and I am not expecting the same deal in future (I may be wrong but I didn't want to lose this deal now). So, I decided to jump on it. It is calculative risk. In future, I might sale my new home with profit and move back to small home.
My current home was built just 3 years before and this new home is under construction. I am taking risk for making money and enjoying stay in bigger home too.
Without risk there is no way to make money.
Do you know other places to invest which gives return more than 3.5%?
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Success is Never Ending and Failure is Never Final.
Talk to a Mortgage Agent. They will help you with all of the details when they set up both your mortgages. Also discuss about the investment in properties and give him the details of the two houses that you will be owning. He will need a very clear picture of your investment criteria and your risk tolerance. ( Ability to take risks in certain fields.) (Look for Promod Chopra and see how he can help you.)
Leave stocks out of the picture for now. You seem to know about the properties that you have gotten into and stay invested in housing. It will do you good.
Yes I do know about a lot of investments that will give you risk free returns. But that is for a later date. For now you stay invested in the properies.
FH
I realize this is a bit of a late reply, but hopefully it helps you and others out.
When converting a house into an investment property, be mindful of the fact that a 'deemed disposition' occurs for tax purposes. This basically means that you are considered to have sold your house at the time you convert it into a rental property, at a price that is the market value at the time.
Then, you also have to consider things like a principal residence exemption, capital gains, second deemed disposition or actual disposition at a later date.
You should have a qualified tax accountant look at your situation and offer advice exactly to how it relates to your situation.
Madan Chartered Accountant team
http://madanca.com/
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Madan Chartered Accountant team
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