Real Estate

Looking to learn more about buying a new build before it is built and then selling it once it is finished

  • Last Updated:
  • Mar 18th, 2021 9:01 am
[OP]
Newbie
May 12, 2020
45 posts
7 upvotes
Guelph

Looking to learn more about buying a new build before it is built and then selling it once it is finished

Looking to learn more about buying a new build before it is built and then selling it once it is finished.

- Is this a good idea?
- what is the best way to prepare numbers on this?
- what should I be on the lookout for?

Thanks for the feedback!
9 replies
Banned
Aug 25, 2020
320 posts
251 upvotes
It can be a good idea, though, if you never actually live in the home, you'll pay capital gains tax. If you do live in the home, for a day, you'll likely get audited by the CRA.

You can't "prepare numbers". Nobody can predict where the real estate market will be in 2 years. Builders have been inflating prices to align better with the market, so if the bubble pops, you might actually lose money.

Lookout for cheap builders, unnecessary lot premiums, and things that may turn future buyers off (further development literally next door, busy streets, etc).
[OP]
Newbie
May 12, 2020
45 posts
7 upvotes
Guelph
threeSwansinCostco wrote: It can be a good idea, though, if you never actually live in the home, you'll pay capital gains tax. If you do live in the home, for a day, you'll likely get audited by the CRA.

You can't "prepare numbers". Nobody can predict where the real estate market will be in 2 years. Builders have been inflating prices to align better with the market, so if the bubble pops, you might actually lose money.

Lookout for cheap builders, unnecessary lot premiums, and things that may turn future buyers off (further development literally next door, busy streets, etc).
Thank you! You make great points here. I am with you on prices...just insane. Risks might outweigh the benefits...
[OP]
Newbie
May 12, 2020
45 posts
7 upvotes
Guelph
Jon Lai wrote: Consider that you have to pay HST if you sell it within a year of closing.
Wow, didn't realize this!
Sr. Member
Jan 28, 2017
944 posts
985 upvotes
what you are asking is flipping an assignment sale
Profit will be assessed as earned income, not capital gains. If you believe RE prices are going to keep mooning from here, then maybe it will work, but you are taking on a big risk.
Newbie
Oct 23, 2020
10 posts
5 upvotes
Selling a pre build home at the point that it is completed is called an assignment sale. More likely than not it would be considered income for tax purposes. Assuming the RE market continues to grow as it is presently, you could still potentially turn out a profit. Many do this. Just have to be prepared on the other end.
[OP]
Newbie
May 12, 2020
45 posts
7 upvotes
Guelph
ChanT26223 wrote: Selling a pre build home at the point that it is completed is called an assignment sale. More likely than not it would be considered income for tax purposes. Assuming the RE market continues to grow as it is presently, you could still potentially turn out a profit. Many do this. Just have to be prepared on the other end.
Okay, really appreciate this.
[OP]
Newbie
May 12, 2020
45 posts
7 upvotes
Guelph
Could anyone provide a scenario with some numbers to say hold a property for a year and then sell it?
Sr. Member
Jan 28, 2017
944 posts
985 upvotes
pters11 wrote: Could anyone provide a scenario with some numbers to say hold a property for a year and then sell it?
If your time horizon is 1 year, why don't you gamble on growth/meme stocks instead? They are much more liquid and who knows, you can pull in 5x return if you bet on the right name Winking Face

Top