Looking to lease your home? Here’s what you should know:
While rental properties can provide a stream of reliable income, housing experts say the first-timer’s success will depend on a lot of factors.
If you want to lease your property instead of selling it, you should start by getting an up-to-date comparative market analysis from your Realtor.
By David Paddon The Canadian Press
Mon., Sept. 11, 2017
With real estate sales softening in many markets across Canada, homeowners looking to unload their property may find it preferable to hang out a “For Lease” sign on the front lawn rather than sell it for a less desirable price.
While rental properties can provide a stream of reliable income, housing experts say the first-timer’s success will depend on a lot of factors — ranging from the location and condition of your property to the tax and legal implications of becoming a landlord.
Property owners should start by getting an up-to-date comparative market analysis from their Realtor.
“The challenge, like pricing any product, is to find the maximum value that you can drive in the marketplace and keep it empty for the minimum amount of time,”
“You can kill the entire economics of renting your condo or your house out if it stays empty for any extended period of time.”
Other than taking a month of turnover to freshen up a property, he says, you never want a rental sitting without a tenant.
Landlords will also be affected by their personal preferences, skills and available time to manage the property.
“It’s not for me but other people love it. They love the do-it-yourself stuff. They love the regular income. They even like dealing with tenants and become friendly with them.”
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One of the key services that a Realtor may provide for landlords is screening prospective tenants to be sure they have good references, are qualified in terms of income and are likely a good fit for the owner.
Unfortunately, once somebody moves into a property, it’s very hard to get rid of them.
Lawyer Max Cohen, senior partner at Cohen LLP in Toronto, says landlord-tenant law falls under provincial jurisdiction and the rules vary across the country.
“Alberta, for example, is a little more landlord-friendly than Ontario (which) tends to be a fairly tenant-friendly environment.”
He adds that landlords need to understand how they’ll be taxed under federal law when the property is sold.
Once a principle residence becomes an income property, there’s a change to its eligibility for an exemption from capital gains tax — potentially a large amount of money, depending on the specific circumstance.
“It doesn’t mean that all of the gain is taxable (but) probably just as important you can’t eliminate the capital gains tax by moving back and living in the property for awhile,” Cohen says.