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Ask the Expert
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Q:
I bought my home three year ago and it has appreciated
by over 150%. Should I keep it or sell it? ---
Jack Anderson, Burnaby, BC
A:
It
really depends on what your plan or goal is. If the
property is your principal residency, you might want
to keep it and refinance it for other investment. If
the property is your investment, it could be good time
to sell now to take the good profit. In this case, you
need to know where you are going to park your money
for safe and good returns. Real estate investment is
a relatively safe and high return investment if you
know how to do it. Professional investors have strategies
to invest in both up-going and down-going markets.
(Eva
Ye, real estate investor, CGA, MSc.)
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Q:
Many of my friends
have bought their houses and some even bought a few.
I regret that I have not bought any. Do you think I
should wait or I should buy one now? ---
Harold Pierroy, Vancouver, B.C.
A:
In my own opinion, you should buy your principal residency
as early as possible. There are a few reasons for that:
1) The current mortgage rate is still very low. Historical
average mortgage rate is around 9% and the current interest
rate is still below 6% for a 5 year term.
2)
You can not time and predict the market. No one knows
exactly when and how much the market goes down although
there is a cycle every 5-9 years. If you don't buy it
now, you need to pay rent anyway. If your rent is similar
to the mortgage payment every month, why rent?
3)
If you believe the house will drop dramatically next
year and mortgage rate won't change much, it may be
worth waiting till next year.
(Peter
Wang, real estate investor, Ph.D.)
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Q:
For investment,
what kind of property and where should I look for?
--- Wendy Thompson, Vancouver, BC
A:
For investment purpose, you need to find cash flow properties
for long-term hold, i.e., the rental income is more
than your expenses including mortgage, insurance, property
tax, repair and maintenance, and hydro and gas (if applicable),
etc. So you still have some positive cash left for you.
To find cash-flow properties, you need to look for big
houses with more rooms or apartment buildings.
(Peter
Wang, real estate investor, Ph.D.)
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Q:
We
have a Bed & Breakfast business at home for over 10
years. The business have used 40% of our home space. The
house price went up considerably. We are wondering if
we need to pay capital gain tax if we sell our house.
--- Roger Castillo, Surrey, BC
A:
As
long as you have not claimed Capital Cost Allowance
or depreciation on the actual building, and that the
business have not used more than 50% of your space,
there is no capital gains tax to pay on the sale of
a bed-and-breakfast home that you physically live in.
(Eva
Ye, real estate investor, CGA, MSc.)
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