Posted on: 24-01-05 23:58:02
Quote:
Orginally posted by Pramod Chopra
Monthly Expenses...... Condo....... House
Monthly Mortgage...... $1,129.29. $1,411.61
Maintenance Fee...........$500.00........$0.00
Property Tax................$170.00.....$250.00
Fire Insurance.................$0.00.......$40.00
Heat / Hydro...................$0.00......$150.00
Property Insurance........$20.00........$20.00
Sub Total .................$1,819.29 ..$1,871.61
Rent from Basement.........$0.00.....-$500.00
Total Expenses............$1,819.29...$1,371.61
I hope it clarifies.
It appears attractive before you answer these:
1)Is water chargeable for house or free? - what is the charge
2)If rented what is the rise in heat / hydro and water cost because consumption will go up
3)How much rent income will effect on income tax? - I heard on radio show if basement is rented to person on cash. The person staying will have driving license, phone bill extra on the address. So it is easy for him to claim his right on the owner ship of house in future. Better to take rent against receipt.
Overall expense will rise in tune of $500
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Try overtaking child's imagination
Quote:
Originally posted by jago_desi
Quote:
Originally posted by Pramod Chopra
Monthly Expenses...... Condo....... House
Monthly Mortgage...... $1,129.29. $1,411.61
Maintenance Fee...........$500.00........$0.00
Property Tax................$170.00.....$250.00
Fire Insurance.................$0.00.......$40.00
Heat / Hydro...................$0.00......$150.00
Property Insurance........$20.00........$20.00
Sub Total .................$1,819.29 ..$1,871.61
Rent from Basement.........$0.00.....-$500.00
Total Expenses............$1,819.29...$1,371.61
I hope it clarifies.
It appears attractive before you answer these:
1)Is water chargeable for house or free? - what is the charge
2)If rented what is the rise in heat / hydro and water cost because consumption will go up
3)How much rent income will effect on income tax? - I heard on radio show if basement is rented to person on cash. The person staying will have driving license, phone bill extra on the address. So it is easy for him to claim his right on the owner ship of house in future. Better to take rent against receipt.
Overall expense will rise in tune of $500
Hi JD
I will give you reply to all your questions but before doing that I would request you to please read this thread completely and carefully
http://canadiandesi.com/read.php?TID=2123&page=1" target="_blank">http://canadiandesi.com/read.php?TID=2123&page=1
Even though that thread is renting vs. buying but you will get answers to most of your questions as I have compared owning condo vs. house in my own case.
However, a quick answers to your questions.
1. Water is not free and I have made provisions for the same in Heat/Hydro as most of the time we use this terminology (utilities) which include electricity, natural gas and water as some municipality combine gas and water bills. However, if you are not still convinced then I should let you know that the higher mortgage payment for the house have on average more than $100 per month going towards the principal or towards the equity of the house then in comparison to the condo mortgage payments.
2. Yes, when you rent your utilities would definitely go up but then generally the landlords charge extra for the utilities from the tenant. Even if the utilities are included then the rent for a one bed room basement apartment would not be $500 as taken in to the example but would be more like $600 or $ 650 which takes care of the increased cost of utilities.
3. Why do you think of giving house on rent to some one and charge cash instead of issuing receipt? This is against the law and should not be done and the income from rent should be added to your employment and or other income. Yes, the rent amount would definitely increase your income but then you are also able to claim the prorated expenses of repairs, mortgage interest, insurance and utilities etc. which you would not otherwise be eligible to claim. After deducting the expenses, the increase may not be significant. Moreover, if you still end up paying some tax then this means you did have the income from renting in the first place and you pay only a percentage (as per your tax bracket) in taxes and keep the remaining income.
Now if we come to other aspects of owning house then a condo, you will find that there are some restrictions in condos which you do not have in your own house such as late night gathering and music etc. You can enjoy your deck or a back yard in your house but can not do the same in a condo.
And one of the most import things is the escalation in the price of house in 5 years in comparison to the escalation in the price of condo which could be significant. Just to prove this point, I my self live in a condo which I bought in July 1999 for a price of $135,000 and it is now valued at around $180,000 means an increase in price of around $50,000 in more than 5 years. However, my brother bought a house at the same time, in July 1999 for $200,000 which is now valued at $325,000 means an increase in the price of more than $125,000 which is 250 percent of the increase in price in my condo’s cost.
I rest my case.
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Pramod Chopra
Senior Mortgage Consultant
Mortgage Alliance Company of Canada
Hi Pramodji,
I agree with your explaination and have two last question which rest the case:
1) What should be the minimum time period to keep house before planning to resale to earn good profit?
2) For the above answer period what should be down payment or my investment participation in house, where I am paying minimum interest, contract termination or anyother overheads in getting relieved from house?
Thnak you
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Try overtaking child's imagination
Quote:
Orginally posted by jago_desi
Hi Pramodji,
I agree with your explaination and have two last question which rest the case:
1) What should be the minimum time period to keep house before planning to resale to earn good profit?
No body can predict this time period. However, in the last 7 years or more we have seen significant price increase in the value of real estate. Historically also, the real estate has given returns in long run though there have been some periods when the rates dropped also but recovered in due course.
Quote:
Orginally posted by jago_desi
2) For the above answer period what should be down payment or my investment participation in house, where I am paying minimum interest, contract termination or anyother overheads in getting relieved from house?
Thnak you
I could not understand the question completely. However, as said earlier that the specific returns can not be predicted. If the down payment is more then you save CMHC premiums and related costs and that is a saving it itself and if you have completed the mortgage term then there are no penalties in selling the house but you certainly have to calculate all the factors and the real estate agents selling commission and lawyers cost in order to find out the real savings and then take action accordingly. Every situation is different and should be carefully looked in to before taking any decision.
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Pramod Chopra
Senior Mortgage Consultant
Mortgage Alliance Company of Canada
