Real Estate

Locked: Unable to sell current home, now renting it out

  • Last Updated:
  • Feb 11th, 2018 9:23 am
[OP]
Sr. Member
Aug 23, 2011
572 posts
67 upvotes
WINNIPEG

Unable to sell current home, now renting it out

Just wanted some thoughts on this one. I had purchased a new construction home (home B) last year and was intending to sell my current home (home A)prior to possession. I was unable to sell my current home and my mortgage broker was able to approve a financial on the new home by stating i will be renting out the current one.

Are there any ramifications when it comes to mortgage renewal with home A? I also only have ~12% equity on home A and put 5% DP on home B.

Any thoughts on what i have to go through?
Last edited by aizecarla on Feb 8th, 2018 7:30 am, edited 1 time in total.
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Banned
Feb 23, 2009
1670 posts
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Oshawa
aizecarla wrote: Just wanted some thoughts on this one. I had purchased a new construction home (home B) last year and was intending to sell my current home (home A)prior to possession. I was unable to sell my current home and my mortgage broker was able to approve a financial on the new home by stating i will be renting out the current one.

Are there any ramifications when it comes to mortgage renewal with home A? I also only have ~12% equity on home A and put 5% DP on home B.

Any thoughts on what i have to go through?
Why are you unable to sell your current home?
Maybe just lower the price?
[OP]
Sr. Member
Aug 23, 2011
572 posts
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WINNIPEG
pkrash wrote: Why are you unable to sell your current home?
Maybe just lower the price?
We have lowered the price multiple times, i had showings at least 3x/week for 3 months. Almost all feedback is positive. I don't know why it isn't selling and now we have to take possession of the other one.
Penalty Box
Aug 11, 2005
4175 posts
1427 upvotes
aizecarla wrote: We have lowered the price multiple times, i had showings at least 3x/week for 3 months. Almost all feedback is positive. I don't know why it isn't selling and now we have to take possession of the other one.
Your price is still too high compared to fair market value, that’s the obvious answer
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Deal Guru
Feb 22, 2011
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Toronto
I didn't know they had precon homes with only 5% down?
[OP]
Sr. Member
Aug 23, 2011
572 posts
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WINNIPEG
Luckyinfil wrote: Your price is still too high compared to fair market value, that’s the obvious answer
Ok thanks. Anyway, do you have any answers to my question?
Deal Addict
Jan 15, 2017
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There shouldn't be any ramifications. If you can qualify to carry both mortgages now, you should be able to qualify to carry both when Home A's mortgage renews.

Your concern right now should be on the tax implications of the rental and the responsibilities of being a landlord.
[OP]
Sr. Member
Aug 23, 2011
572 posts
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WINNIPEG
skeet50 wrote: There shouldn't be any ramifications. If you can qualify to carry both mortgages now, you should be able to qualify to carry both when Home A's mortgage renews.

Your concern right now should be on the tax implications of the rental and the responsibilities of being a landlord.
Thanks. That's what I thought but I wanted to make sure. Tax implications like on the rental income? I am aware of the risks being a landlord comes with, however that's my only option for now.
Deal Addict
Aug 19, 2002
3341 posts
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aizecarla wrote: Thanks. That's what I thought but I wanted to make sure. Tax implications like on the rental income? I am aware of the risks being a landlord comes with, however that's my only option for now.
It's not your only option. Selling it at the market price is another.

Just keep in mind any capital gains or losses now that it's a second property when you do end up selling it.
Deal Expert
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Aug 2, 2010
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Here 'n There
Luckyinfil wrote: Your price is still too high compared to fair market value, that’s the obvious answer
As an agent I know that if the house don't sell the price is too high.
Deal Addict
Jan 15, 2017
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aizecarla wrote: Thanks. That's what I thought but I wanted to make sure. Tax implications like on the rental income? I am aware of the risks being a landlord comes with, however that's my only option for now.
Yes, and tax implications on converting the home to an investment property.
Sr. Member
Aug 15, 2013
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Guelph
goob3r wrote: It's not your only option. Selling it at the market price is another.

Just keep in mind any capital gains or losses now that it's a second property when you do end up selling it.
If OP sells his "Home A" while it is still a primary residence, there shouldn't be any capital gains tax.
[OP]
Sr. Member
Aug 23, 2011
572 posts
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WINNIPEG
goob3r wrote: It's not your only option. Selling it at the market price is another.

Just keep in mind any capital gains or losses now that it's a second property when you do end up selling it.
The only way I had to get financial on home B is to have it as a rental and the builders won't push back the possession date unless there was an offer on the table.
[OP]
Sr. Member
Aug 23, 2011
572 posts
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WINNIPEG
dundeal wrote: If OP sells his "Home A" while it is still a primary residence, there shouldn't be any capital gains tax.
Unfortunately it won't be primary residence by the time I sell it.
Jr. Member
Feb 12, 2012
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BRANTFORD
I have been there. Your first step is to get a written appraisal for the property you were living in prior to your purchase of the new home. You will need this for when you eventually sell your now rental in order calculate capital gains.

Depending on where you live and the style of house you were trying to sell you can consider renting it as an upper and lower, utilities included or not at all. You will need to keep in mind it will typically make it more difficult to sell a home with tenants residing in it already. The more you have the more challenges for a later sale. Long term outlook of if you can manage being a landlord have to be thought out.

Lastly, get yourself familiar with the legalities associated with being a landlord. Read up on the landlord tenant board site and look into any of the landlord associations that may be in your area.

Good luck with whatever you decide.
Member
Oct 26, 2007
314 posts
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eonibm wrote: As an agent I know that if the house don't sell the price is too high.
Nice analysis
Deal Addict
May 9, 2017
1142 posts
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negotiater wrote: Nice analysis
Don't be so hard on them. That's the entire content of real estate exam 4.
[OP]
Sr. Member
Aug 23, 2011
572 posts
67 upvotes
WINNIPEG
carpent wrote: I have been there. Your first step is to get a written appraisal for the property you were living in prior to your purchase of the new home. You will need this for when you eventually sell your now rental in order calculate capital gains.

Depending on where you live and the style of house you were trying to sell you can consider renting it as an upper and lower, utilities included or not at all. You will need to keep in mind it will typically make it more difficult to sell a home with tenants residing in it already. The more you have the more challenges for a later sale. Long term outlook of if you can manage being a landlord have to be thought out.

Lastly, get yourself familiar with the legalities associated with being a landlord. Read up on the landlord tenant board site and look into any of the landlord associations that may be in your area.

Good luck with whatever you decide.
I've already started reading up on the Residential Tenancies Act. We may consider renting it out if the current tenants are good. Unfortunately it was a last minute decision and we even considered selling the house at a loss but not with the current possession date approaching too fast.

Our decisions may be frowned upon on this board, but it was what i had to do with the current situation. Even if we sell it at a loss, we cannot do it right away.
Banned
Feb 23, 2009
1670 posts
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Oshawa
aizecarla wrote: I've already started reading up on the Residential Tenancies Act. We may consider renting it out if the current tenants are good. Unfortunately it was a last minute decision and we even considered selling the house at a loss but not with the current possession date approaching too fast.

Our decisions may be frowned upon on this board, but it was what i had to do with the current situation. Even if we sell it at a loss, we cannot do it right away.
You can sell it tomorrow for cash and quick closing if the price is right.
[OP]
Sr. Member
Aug 23, 2011
572 posts
67 upvotes
WINNIPEG
pkrash wrote: You can sell it tomorrow for cash and quick closing if the price is right.
I understand some people may want to do that but you don't know the whole situation. I asked a specific question about renewals, not advice about selling it.

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