Tag Archives: Seller

How Much Will I Owe in Capital Gains Tax if I Sell My Cottage?

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When you and your family decide that it is time to pack up the bug spray, sunscreen and bathing suits and list your family cottage you may have a lot of questions.  Like, who gets to keep the water wings? Where did your favourite blue bathing suit go? And, who wants to help use up the last of the fire wood and marshmallows?

There’s also a good chance that you’re going to have a few questions for your local REALTOR®.

Such as “What will I owe in capital gains tax if I sell my cottage?”
With the sale of any property, you are required to report it to the CRA and pay the applicable capital gains tax. This includes the sale of your beloved family cottage. The CRA does offer an exemption on this appreciation tax to principal residences, which could possibly apply to your cottage. Let me explain.
 
If you enjoy your cottage as your vacation home and it IS NOT  your principal residence then you would be required to pay the applicable capital gains tax at time of sale. How much exactly? The amount that you will owe depends on the appreciated value from the time you purchased the cottage 
 
For example,  if you purchased the cottage for $200,000 ten years ago and now plan to sell the cottage for $500,000 due to appreciation and improvements you’ve made over the years you would owe capital gains tax on $300,000 (the difference between sell price and purchase price).
 
On the other hand, if your cottage IS your primary residence then you may be exempt from paying any capital gains tax.
Although the sale of a principal residence still needs to be reported to the CRA it is exempt from being taxed on capital gains.
In some scenarios, your cottage may start off as your vacation home but become your primary residence after some time.  If this is the case, the tax owed on capital gains is based on the appreciation before it became your principal residence. 
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For example, you purchased the cottage for $200,000 ten years ago but moved in to the cottage as your primary residence after five years of ownership. At that point the cottage had appreciated in value to $250,000.  In the five years since you’d been living there, you completed improvements increasing its value further and intend to sell it now, another five years later, for $500,000.
 
In this scenario you would only owe capital gains tax on $50,000 (the value of the property at the time it became your principal residence less the original purchase price). You would be exempt from paying the capital gains tax on the additional $250,000 in appreciated value over the five years that the cottage was your principal residence.
 
Contrary to popular belief, capital gains are not taxed at your marginal tax rate. Only half (50%) of the capital gain on any given sale is taxed all at your marginal tax rate (which varies by province). On a capital gain of our example of $50,000 for instance, only half of that, or $25,000, would be taxable. For a Canadian in a 33% tax bracket for example, a $25,000 taxable capital gain would result in $8,250 taxes owing. The remaining $41,750 is the investors’ to keep.
 
If you’re thinking of selling your cottage we can help make sure you are asking the right questions and getting the answers that you need. You can reach out to us at 519.586.7922.

Simple Tips for Listing Your Home

Listing tips

In most industries today, buyers are doing their research before they shop. Likewise in real estate, buyers typically have a very good idea of the market they are shopping in as well as the property values within. With such knowledgeable shoppers, it is increasingly important that you have the resources to price your property competitively.

In order to attract the right buyers for your property, here are some important listing tips to consider!

Factors in Determining Your Property’s Value

Before you compare your home to similar properties and establish a competitive list price, the following points should be considered.

  • Location! Location! Location!
  • Size of home and lot
  • Style of home (Bungalow or 2 storey, etc.)
  • Condition and finishes/upgrades
  • Buyer Demand

Get to Know Your Market

A comparative market analysis (CMA) is an indicator of what today’s buyers are willing to pay for a home.  It compares the market activity of homes similar to yours in your neighbourhood.

Those that have recently sold represent what buyers are willing to pay.  The properties currently listed for sale represent the price the seller is hoping to obtain and show you what your competition is.  The listings that have expired were generally over-priced or poorly marketed. 

Together, you and your REALTOR® will review the CMA and establish a competitive market position for your property.

The Importance of Early Activity

As soon as a property comes on the market, there is a flurry of activity surrounding it.  This is the crucial time when REALTORS® and potential buyers sit up and take notice.

If the property is over-priced, it doesn’t take long for interested parties to lose interest.  By the time the price drops, a majority of buyers are lost.

Week 1

The Results of Overpricing

Many sellers believe if they price their property high initially, they can lower it later.  Often, when a property is priced too high it experiences little activity.  Gradually, the price will come down to market value, but by that time it’s been for sale too long and some buyers will be wary and reject the property.

On occasion, the price is dropped below market value because the seller runs out of time.  The property sells for less than it’s worth.

Missing the Right Buyer…

You may think that an interested buyer “can always make an offer” but if the property is over-priced, potential buyers looking in a lower price range will never see it.  Those who can afford a property at your asking price will soon recognize they can get better value elsewhere. For more insight on how to make sure the right buyer sees your property check out our blog on positioning your price for optimal search results!

Understanding the Factors that Influence Overpricing

Be aware of the factors that may tempt you to list your property too high.

  • Extensive renovations/hidden costs
  • Desire to purchase in a higher-priced area
  • Original cost of the home was too high
  • Lack of real market information
  • Building in “bargaining room”
  • Perceived emotional value

The Benefits of Pricing Your Property Right

Marlborough

With market knowledge and accurate property valuation your property can be positioned at the right price point to generate early activity and attract the right buyers. The right price also means:

  • Your  property sells faster, because it is exposed to more qualified buyers.
  • Your property doesn’t lose it’s “marketability”
  • The closer you price your property to marker value, the higher the offers
  • A well-priced  property can generate competing offers
  • REALTORS® will be enthusiastic about presenting your property to buyers

Pricing your property right is important! With these helpful tips, you’ll be armed with valuable knowledge when it comes to selecting your list price.  However, listing a property is complex and there are still many other items to consider.  Reach out to us at ray@eriesedge.com or 519-586-7922 if you have any questions about listing your home.

Picking the Right Mover

Picking the right moverIt’s moving day! Are you excited? Or, are you stressed? Moving can be an emotional time and we’d like to offer a few tips to help you manage your move when it comes to hiring the right mover.

We touched base with transportation expert Kristen Hopley for some guidance. First and foremost, Kristen advises that you should decide what level of effort you want to put into your move.  Are you willing to and have time to over see the move?  If not you need to find a reputable mover. Here’s Kristen advice for finding that trust-worthy mover for your moving day!

Ask friends and family for a recommended mover

Ask others whom you trust who they had move them and if they would recommend that mover. This is a great way to start narrowing down your list of potential moving companies.

Get 3 quotes

Contact 3 movers and request that they have a representative come into your house to do an estimate of what needs to be moved.

Make sure that the Representative comes to your home to see what they will be moving

When meeting with the representatives make sure they take the time to answer all of your questions.  They can only provide a proper quote if they know exactly what services you want.  Are you looking for a full pack or just the move?  They should explain what steps they take to protect your belongings. Do they blanket wrap your furniture, pad your bannisters, put floor runners down to protect your carpet, and if you have marble floors what type of material will they lay down (should be plywood or Masonite) to protect your floors?  The best representatives will ask to walk through the house asking you what will be moving and what is staying.  They should want to open closets and look in the basement garage and sheds. These representatives are gathering as much information as they can to provide you with an accurate quote for service.

Visit the moving facility

Request to visit their moving facility.  This is a great way to evaluate the companies level professionalism and judge their quality of service. Are the facilities clean? Is the staff friendly? Do they behave like experts in their field and are they willing to answer any further questions you have? 

Ask lots of questions as well as their advice about the services they offer

During this visit, make sure to ask questions so you can manage your expectations around preparing for the move and for the day of the move.  For example, if you are packing your own belongings into boxes ask the mover if they loan packing materials?  If not, how much do they charge for the paper and the packing boxes? 

Carefully review each quote

Once you receive all three estimates look through them carefully.  It’s important to pay attention to the details. If the movers are quoting by the hour how many men and trucks are each quoting?  Make sure they are the same.  If you are going a distance, anything over 100kms they should probably be quoting by weight and mile.  Check the weights of each quote.  What is each mover charging per pound.  When looking at your quotes make sure that everyone has included the services you are requesting.

Will they guarantee their estimate not to exceed by more than 10%?

Lastly, ask your mover of choice will they guarantee your quote within 10%.  If they say no, ask them why.  Each representative should be qualified enough to know how to create an estimate that would fall within 10%.  The reason estimates are not an exact science is, you may chose to bring goods you thought you would not and the weight of your furniture is hard to determine.

Once you’ve picked the right mover for you, the packing can begin! 

There are many ways to help manage your move to ensure you have a seamless moving day. If you have any questions about your upcoming move, ask us! Leave a comment below or give us a call at 519-586-7922.

Bonus: Packing Tips
  • Be prepared for your move!
  • Always use moving boxes.  This will make your move easier and reduce the time.
  • Have all your boxes packed before the move day.
  • Label each box with your name and the room it will go into. 
  • Use your luggage for last minute articles. 
  • Pack a box of cleaning supplies, toilet paper, facial tissue and drinks and glasses and put this in your car (provided you are driving to the new house).  

We’re Proud of Our Team!

Five Erie’s Edge REALTORS® have been awarded both the ABR® and SRSsm accreditations.

“I’m proud of our team of REALTORS®”

Rachel Larose, Greg Mitchell, Krystal West, and Amie & Ray Ferris committed to going beyond registration education and exemplify a commitment to professional development and strong business ethics.

To earn the  Accredited Buyer’s Representative (ABR®) designation requires successful completion of a comprehensive course in buyer representation and an elective course focusing on a buyer representation specialty, both in addition to submitting documentation verifying professional experience. 

The Seller Representative Specialist (SRSsm) means our REALTORS® join an elite group of real estate professionals  around the world who have earned the SRSsm designation.  All were required to successfully complete a comprehensive course in seller representation, pass a comprehensive exam and subscribe to the REALTOR® Code of Ethics.

Erie’s Edge Real Estate Ltd.’s Broker of Record Ray Ferris said “I’m proud of our team of REALTORS® who are committed to advancing professionalism in the real estate industry by investing in ongoing education to stay current in our profession.”

“Real estate transactions are growing increasingly complex,” remarked Ferris.

“Changes in the real estate business and the real estate market require a dedication to a higher level of knowledge.  Our REALTORS® take that responsibility very seriously as demonstrated by their return to the classroom.”

Designations are an excellent way for consumers, investors and employees to identify commitment and experienced real estate professionals.

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