Principal Residence and Renting Out: Condo vs. Furnished Basement
Folks,
I'm looking at potentially purchasing my first Real Estate Property and curious what your advice might be in regards to using the Principal Residence Exemption (PRE) for Capital Gains.
Here are the options:
My objective
Optimize my return on money by buying a place that will appreciate and enable me to potentially sell it down the line. I dont have any particular timelines (no family) and happy to sell in 2 years or 8 years.
My situation
I'm a consultant and work 80% of time in the states - US employee in fact. The 20% + Weekends I intend to come back to Toronto maybe 80% of time. Have a girlfriend here so could potentially stay with her when I am here. I am currently renting downtown Toronto for $1700 a 1+1 spot w/ parking for which market rate is about $2,200. So I am thinking maybe my gf could move into my place where I am now
Option 1
Purchase Condo and Rent it out immediately - can delay rent out if needed for tax purposes in order to qualify for the PRE. I am thinking if I can rent out the condo for lucrative amount vis-a-vis my mortgage payments then I can basically stay in my current rented suite. My girlfriend could move into my current place and I could transfer lease I guess into her name as 4 days a week I am in the states. I know there is some "Four year exemption" whereby I dont need to inhabit it but can still claim the PRE.
Option 2
Purchase a house where I will have three options: a) occupy it fully, b) occupy main and top floors but rent out basement, or c) rent out the whole thing. Option a) isn't my preferred route at this time as I dont want to kill myself with mortgage payments (please assume I can still pay it for a year or so even if I struggle getting a tenant initially). I presume c) is similar to the Condo Option - can I use that 4 year thing there? However, from my reading online it is that b) gets tricky.
Interested to hear everyone's thoughts on this.
Thanks.
I'm looking at potentially purchasing my first Real Estate Property and curious what your advice might be in regards to using the Principal Residence Exemption (PRE) for Capital Gains.
Here are the options:
My objective
Optimize my return on money by buying a place that will appreciate and enable me to potentially sell it down the line. I dont have any particular timelines (no family) and happy to sell in 2 years or 8 years.
My situation
I'm a consultant and work 80% of time in the states - US employee in fact. The 20% + Weekends I intend to come back to Toronto maybe 80% of time. Have a girlfriend here so could potentially stay with her when I am here. I am currently renting downtown Toronto for $1700 a 1+1 spot w/ parking for which market rate is about $2,200. So I am thinking maybe my gf could move into my place where I am now
Option 1
Purchase Condo and Rent it out immediately - can delay rent out if needed for tax purposes in order to qualify for the PRE. I am thinking if I can rent out the condo for lucrative amount vis-a-vis my mortgage payments then I can basically stay in my current rented suite. My girlfriend could move into my current place and I could transfer lease I guess into her name as 4 days a week I am in the states. I know there is some "Four year exemption" whereby I dont need to inhabit it but can still claim the PRE.
Option 2
Purchase a house where I will have three options: a) occupy it fully, b) occupy main and top floors but rent out basement, or c) rent out the whole thing. Option a) isn't my preferred route at this time as I dont want to kill myself with mortgage payments (please assume I can still pay it for a year or so even if I struggle getting a tenant initially). I presume c) is similar to the Condo Option - can I use that 4 year thing there? However, from my reading online it is that b) gets tricky.
Interested to hear everyone's thoughts on this.
Thanks.