Real Estate

Refinance question/help needed!

  • Last Updated:
  • Jun 9th, 2021 9:28 am
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[OP]
Newbie
Jun 4, 2021
3 posts

Refinance question/help needed!

My wife and I are self-employed. I own the following rental properties all in Ontario. These 2 rental properties have a good amount of equity in them.. We will be closing rental property #3 at the end of 2022 purchased by the builder.

Property #1: Mortgage just got renewed @1.9% and has equity of almost 700,000.

Property #2: Mortgage renewal is due in December 2021. Currently at 3.9% fixed, equity almost

600,000.

We are considering our options:

Option #1: Refinance both 1 & 2 and pull out the equity to be prepared for 2022 closing as we are self employed although both have over 800 credit score but I am sure banks won't entertain us as we tried before and were told we don't qualify. We would prefer to stay with A lenders to get good rates, hence not considering private lenders.

Option #2: Refinance Only one property #2 with the same lender as the renewal is coming up and save the money for 2022 closing.

Question #2:

What would be the tax implications and would there be any capital gains when we we finance property #2.
4 replies
Deal Addict
User avatar
Apr 12, 2013
2134 posts
1011 upvotes
Moon
If its closing 2022 why are you pulling out money now? Are you looking to take advantage of the rates? How much money do you need? You just renewed property 1, why didnt you pull out money then?

If you can get a reasonable cancelation rate try to get out of the the mortgage @ 3.9.
Koodo, Public Mobile, Lucky Mobile Customer
Deal Addict
Mar 3, 2018
2131 posts
2136 upvotes
GTA
I can speak to your question 2 on tax implications. Refinancing does not subject the property to capital gains tax. That happens when you sell or are deemed to dispose of the property. That is not happening here.

Interest is only deductible if the funds borrowed were used to earn investment or property income. If you borrow funds now that just sit around until next year then the interest cost would not be deductible.
Jr. Member
Jun 8, 2009
152 posts
46 upvotes
Toronto
See your private messages.
Loyal12 wrote: My wife and I are self-employed. I own the following rental properties all in Ontario. These 2 rental properties have a good amount of equity in them.. We will be closing rental property #3 at the end of 2022 purchased by the builder.

Property #1: Mortgage just got renewed @1.9% and has equity of almost 700,000.

Property #2: Mortgage renewal is due in December 2021. Currently at 3.9% fixed, equity almost

600,000.

We are considering our options:

Option #1: Refinance both 1 & 2 and pull out the equity to be prepared for 2022 closing as we are self employed although both have over 800 credit score but I am sure banks won't entertain us as we tried before and were told we don't qualify. We would prefer to stay with A lenders to get good rates, hence not considering private lenders.

Option #2: Refinance Only one property #2 with the same lender as the renewal is coming up and save the money for 2022 closing.

Question #2:

What would be the tax implications and would there be any capital gains when we we finance property #2.

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