Refinancing vs. Selling a Rental Property

Are you considering whether to refinance or sell your rental property in light of the recent tax rate increases? Let's dive into the details together.
In this video, I break down the options of refinancing versus selling, helping you navigate these changes with confidence.
This video provides a detailed comparison of both options, helping Canadian real estate investors make informed decisions in their quest for financial freedom.
Watch as I dive into the financial implications, tax benefits, and personal goal alignment of each strategy.
Key Moments In This Episode
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00:00 - Tax Rate Impact
02:25 - Goal Clarity
04:39 - Refinance vs Sell Basics
06:59 - Financial Outcomes
09:25 - Cash Flow Considerations
11:41 - Refinancing Benefits
13:59 - Lowering Costs
16:13 - Income-Based Decisions
18:13 - Strategic Decisions
If you have any questions or thoughts after watching this video, leave a comment below, and I’ll respond as soon as possible.
Don’t forget to subscribe to my channel for more videos on Canadian real estate and tax-saving strategies so you don’t miss a thing!
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Please make sure to speak to a professional that knows your personal situation before making a decision.
If you need to talk to someone on my team, email us at [e-mail].
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DISCLAIMER:
Real estate Tax planning is a personalized decision and will depend on your situation, priorities, and risk tolerance. Consult with your legal and tax advisors to ensure you get the best personalized advice.
The information contained in this video is for general information purposes only.
The information is provided by ECRB Consulting Inc., RealEstateTaxTips.ca, Cherry Chan Professional Corporation and Cherry Chan.
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[@tonysimone2043]

Hi Cherry very useful information . For me at my age i do not want to refinance i will wait 1-2 years for a new government.

[@gregpargetter3260]

You are only paying the bank if you don’t sell. So much risk without the reward. Sell and you can get a GIC with 5% and you don’t have to worry about renters and government control.

[@RealEstateTaxTips]

I agree to a certain extent - using my mom as an example, selling allow her to cash out, investing in Enbridge share will give her 7.5% return annually. Way better than holding the property. Even for her, it's still better off to keep it given that she personally can't handle the ups and downs of stock market. For the people who believe in the market and would like to minimize taxes, that's a different story. Selling now means they have to pay higher amount of capital gain tax

[@danb.4128]

@@RealEstateTaxTipsAs a back of napkin rule, if your investment property is cash flow negative but you can afford to carry it (and only then) it would be any advantage of refinancing for getting cash flow positive and then being taxed on the profit ? And that beside more interest being paid overall with less home equity being built! Ultimate thought being to hold for price appreciation in time… Very interesting video 😊 Thank you

[@george5663]

Sell the investment property will put yourself in the highest tax bracket, GIC may not a good option from the tax perspective.

[@50tigres79]

TThanks Cherry Chan for this video. I just wish there is a template of the sheet you used to calculate the sale and finance

[@danielrichards3647]

Thanks!

[@kgo8457]

Looking sharp! ⭐⭐⭐ Super useful information, as usual. 🙏

[@RealEstateTaxTips]

Much appreciated!

[@reisschancellor9753]

Exactly our dilemma. Very useful. Thanks!

[@RealEstateTaxTips]

Glad it was helpful!

[@homer30]

I've always considered refinancing but the problem with it is that your principal mortgage will go up and your monthly will go up as well. So now it'll take you longer to pay your home loan. You surely get your equity but you better make sure you invest that money that it can supplement the higher home loan amount you now owe.

[@RealEstateTaxTips]

100% agree - hence why it's important to know what your goals are... and make sure the new investment can cover the increased carrying cost of refinancing.

[@nabilfarah7817]

Hi Cherry, I have an identical property as you described except that I don't have a mortgage on it. Could a large renovation cost say $180K on the property be used to decrease capital gains if I sell or refinance? I appreciate your analytical response 😊

[@ankurperiwal9704]

Ultimate business partner - CRA :P LOL!

[@jasonnicols4642]

Hey Cherry How does a large renovation factor in? Is this a capital cost that would decrease the capital gains?

[@nabilfarah7817]

Hi Cherry, I have an identical property as you described except that I don’t have a mortgage on it . Could a large renovation cost say $180K on the property be used to decrease capital gains if I sell or refinance? I appreciate your analytical response 😊

[@akhere4279]

Does it make sense to convert a variable mortgage of 6.58% to fixed mortgage now with same bank? Or wait for for more interest drops with variable?

[@AnitaSridhar]

Wait .

[@trudydolan1915]

Hi Cherry. We are looking at selling our rental property to our son. If capital gain is over $250,000, but we are splitting the capital gain, then would my husband and I be at 50% each as far as gain goes. If you have any other suggestions around selling this property and saving us tax money, that’d be greatly appreciated. Cheers

[@olerealestate5912]

What happen with the vendor take back when you sell

[@melissahancock4556]

If you took a VTB at closing your purchase, it is treated just like a regular mortgage and will be paid out on closing. To the principal and interest plus any other fees will be provided to your lawyer on the discharge statement to be paid. P.s im a real estate conveyancer 😊