Personal Finance

Max out TFSA or buy condo

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  • Nov 28th, 2019 12:32 am
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[OP]
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Aug 22, 2011
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Max out TFSA or buy condo

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Last edited by epinephrine on Nov 30th, 2019 5:11 pm, edited 3 times in total.
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Deal Fanatic
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Dec 23, 2008
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Milton
epinephrine wrote: My plan is to buy a pre-sale condo which will be done in 4-5 years OR fill up my TFSA using index funds couch potato. What would do you in my shoes?
What is your goal for your TFSA?
Sr. Member
Mar 16, 2018
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Hamilton
I understand the notion of prioritizing all the tax-sheltered investment accounts such as TFSA but I am also debating on using it as a down payment (20% for a 500k condo).
If you were going to live in the condo, I would say that these options are equivalent since your primary residence IS a tax shelter, but since it sounds like you're using this as an investment property I'm going to pull a Garth Turner and say stuff that TFSA ya moister.
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Feb 9, 2018
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With 100K down payment and 50K salary, I think you will not qualify for a mortgage of 400K. Hopefully its pre-con condo and by the time its ready, you have a change of career (for the good) or a better paying job in same field. Some risk though. Unless you are willing to take that risk, you should look to TFSA.
[OP]
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Aug 22, 2011
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spena wrote: What is your goal for your TFSA?
Ideally, i would like to have the index funds grow for the next 5+ years. Perhaps, these savings would be used as a down payment later down the road.
[OP]
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sunbat wrote: With 100K down payment and 50K salary, I think you will not qualify for a mortgage of 400K. Hopefully its pre-con condo and by the time its ready, you have a change of career (for the good) or a better paying job in same field. Some risk though. Unless you are willing to take that risk, you should look to TFSA.
Yes, the pre-sale condo won’t be completed in 4 to 5 years. The condo is located near a new sky train station and my girlfriend who’s in the real estate field suggests it would be a good investment. Let’s say its completed and I can’t get a mortgage, I still have the option of selling it as an assignment depending on market conditions.
Deal Fanatic
Nov 24, 2013
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Kingston, ON
epinephrine wrote: Yes, the pre-sale condo won’t be completed in 4 to 5 years. The condo is located near a new sky train station and my girlfriend who’s in the real estate field suggests it would be a good investment. Let’s say its completed and I can’t get a mortgage, I still have the option of selling it as an assignment depending on market conditions.
If it's that far out, pre-con, what's the deposit schedule actually like? I didn't think many of them would need 20% down up front, but rather 5% at a time at different milestones?

I'm guessing if it is something you want to do, you could still keep the bulk invested in a TFSA instead of handing the builder a free loan for 5 years.
Deal Fanatic
Jan 19, 2017
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epinephrine wrote: I've got 100k from inheritance. I understand the notion of prioritizing all the tax-sheltered investment accounts such as TFSA but I am also debating on using it as a down payment (20% for a 500k condo). My TFSA only has about $1000 in it and this would be my first home purchase in Greater Vancouver.

STATS:
  • 30 yrs old
  • 50k salary before tax
  • $1000/month for rent
  • $5000 in checking
  • $1000 in TFSA
  • no RRSP
  • no debt

As an accountant in industry, I would need to jump ship if I want to increase my salary. I am also exploring a career with the CBSA because accounting is boring and low paying. My rent payments are lower than market rate because I am living with a friend (he's my landlord). In two years time, my girlfriend and I will be living in a brand new condo and will be paying below market rate rent - thanks to her parents who owns the new unit.

My plan is to buy a pre-sale condo which will be done in 4-5 years OR fill up my TFSA using index funds couch potato. What would do you in my shoes?

Any input is much appreciated.
Only 50k salary before tax as an accountant ? Are you a CPA? If you are, then you are definitely getting much less than you should.
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Nov 24, 2013
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ml88888888 wrote: Only 50k salary before tax as an accountant ? Are you a CPA? If you are, then you are definitely getting much less than you should.
There's a lot more A/P and A/R jobs out there than jobs that require a CPA. A CPA would likely be in a managerial role and making much more.
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Milton
epinephrine wrote: Ideally, i would like to have the index funds grow for the next 5+ years. Perhaps, these savings would be used as a down payment later down the road.
generally investing in index funds is a 10yr+ investment. If you see yourself putting a dp in less than 10yr then you should put that money in a HISA and let it grow about 2.5% - 3.3% or gic (with low mer fees) for guaranteed growth.
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Jan 19, 2017
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Mike15 wrote: There's a lot more A/P and A/R jobs out there than jobs that require a CPA. A CPA would likely be in a managerial role and making much more.
If he doesn't have a designation, then he is not an accountant, probably an accounting clerk, or bookkeeper.
[OP]
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Aug 22, 2011
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Vancouver
Mike15 wrote: If it's that far out, pre-con, what's the deposit schedule actually like? I didn't think many of them would need 20% down up front, but rather 5% at a time at different milestones?

I'm guessing if it is something you want to do, you could still keep the bulk invested in a TFSA instead of handing the builder a free loan for 5 years.
10% upfront, next year 5%, again next year, and again.
[OP]
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Aug 22, 2011
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ml88888888 wrote: If he doesn't have a designation, then he is not an accountant, probably an accounting clerk, or bookkeeper.
I imagine salaries here in Vancouver are lower than Ontario. I work just right outside Vancouver. The same position in Vancouver would be paying around 60k. I'm not doing AP/AR duties, I guess I'm a non-designated accountant.
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Sep 23, 2011
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Vaughan
TFSA hands down just because of the risk associated with real estate. With your salary and no savings can you afford things going sideways (bad tenant, repair bills, losing your job, etc.)?

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