How Will Owning A Second Home In Canada Affect Your Finances?

1. How Will Owning A Second Home In Canada Affect Your Finances?

2. When it comes to mortgages, buying your first home differs greatly to buying a second, vacation home, with lenders viewing your application entirely differently. If you’ve been the type of homeowner who has always repaid their mortgage, making timely payments and consistently, then you should encounter a smoother experience when it comes to buying another home. If you’re considering buying a second home but are not sure whether it’s the right decision to make from a financial standpoint, then the following information could help you make a more informed, sensible decision:

3. Will my costs double when I buy a second home? Below are some of the financial implications of owning a Canadian vacation home, irrespective of whether you plan to rent it out, or keep it for personal use: Property taxes Another loan Costs associated with maintaining a second home Capital gains or losses upon resale

4. In Canada, second homes are taxable assets, so you’ll need to think carefully about the ramifications of this in so far as your long-term estate planning is concerned, while also keeping mortgage repayments and property taxes in mind. Are there any tax benefits for vacation homes? Let’s look in a little more detail at the tax breaks your second home may, or may not, be eligible for: Capital loss Should you intend to use your second property as a vacation home for yourself, you won’t be eligible for capital loss deductions.

5. Rental expenses You’re able to claim applicable expenses against the income you earn if you use the home as a rental, and some of the rental expenses for properties in Canada include the following: Advertising Cleaning Property management fees

6. Cleaning Fees and commissions from an agent Depreciation (claimed as a Capital Cost Allowance or CCA) Insurance You’re able to deduct the premiums you pay of your second home is a rental property, but note that you can only deduct premiums applicable to the current tax year, even if your policy gives coverage for longer.

7. Property tax deductions When your second home is being used as a rental, you can deduct property taxes for that period, and for the period when it’s being marketed. You are not able to claim these deductions for periods when the home is being renovated, however. Principal residence exemption In some cases, it is possible that this exemption can be claimed on a vacation home, but you’ll need to make sure you do so correctly, or you’ll scupper your chances of being able to claim it at all.

8. Why it’s so important to have a clear plan in place Buying a vacation home isn’t a decision to be taken lightly, and while it could prove to be a lucrative one should you decide to rent it out to holidaymakers, there are many financial aspects to be accounted for. Having a clear plan in place can help you make a rational decision, and a wise investment. Write down your main purpose for buying a second home, and assess your finances to figure out how you will pay for all of the associated costs. By scrutinizing your finances in minute detail, making a realistic and clear plan, and seeking the right advice from a mortgage broker, when necessary, it’s possible to reap the many rewards of owning a second home in Canada.

9. Mortgage-broker-Calgary is your best resource for finding a mortgage for your property. Luke Wile, is the best Calgary mortgage agent and is proud to serve clients from across Canada, while being centered in Calgary, Alberta. Luke is proud to serve his clients with a personalized approach to finding his clients the best and lowest Canadian interest rates and terms offered by the major banks and private lending institutions. If you are looking for best mortgage rates in Calgary, with Luke Wile you can get fast and personal expertise for your mortgage!