Retirement Income Question
They also took possession of a Condo in Toronto this summer. This was supposed to be their residence for foreseeable future but circumstances changed. The Condo was 650K+ and is now worth 950K+. They have nominally moved in with change in address and some furniture, but place is empty. Longer term they intend to stay with my brother.
They have a steady income from CPP/OAS & GIS of about $2800 combined. All other income is zero. There is 300K mortgage on the Condo.
Keep the condo for the year. Eat the cost for a year.
Sell it after a year. Net 600K-650K cash.
Max out TFSA 150K
1. Rent the condo $3600/month
2. Take and additional loan of 150K from the equity to fund TFSA.
3. Condo Expenses incl interest + property tax + maintain would be $2000 month.
4. Rent would be $3600 a month. Net would be ~$1500 a month.
5. But this income would reduce the OAS/GIS income by roughly $750.
6. Capital gains tax on 300K increase in the condo would also have to be paid. There is an article about section 45(2) of income tax code to declare the condo as primary residence each year, but that would only shelter the gains for 4 year.