The Reasons Parents Are Buying Property For Their Children
In the 80s, a few mothers and fathers used to purchase their children a car when they finished secondary school . Today, a number of parents take the commencement reward a stride further and acquiring condos for their kids. Could they be helping them or limiting them?
Exactly what are the reasons associated with this particular new development of buying condo properties or Toronto houses for sale for their kids? For many parents, it’s the satisfaction of knowing that the child will not need to devote a lot of money for a proper residence. For other individuals, it’s a method of educating their child how to be responsible for a property and look after themselves.
This is a trend that is certainly growing throughout Canada. Several parents are purchasing new condo properties for their children attending university or college, as seen in the Asian community in the GTA. Some condo developers are even providing bonuses that are especially developed for parents buying their kid a unit, as seen in Montreal.
Any time your child goes to school in a different town, college student accommodations can be confined and costly which has provided fuel for the fire of mothers and fathers purchasing condo properties for their kids. In certain circumstances, mothers and fathers may purchase houses big sufficient so that the kids can get room mates, or maybe tenants within a basement flat, to help with the monthly costs.
As with all other real estate investment decision, one of the most significant elements when selecting a home is its location. You must bear in mind how simple it would be to rent the residence when your child leaves. Or should you choose to sell the condominium at the end of the four years, will you make back your purchase or make some money?
The tax consequences are one more consideration when thinking about acquiring a condominium. Buying the property under your personal name may qualify it for capital gains tax. Only one property can be specified as the main residence of an adult in Canada each and every year. Within Canada, whenever a person marries and then divorces, any properties will be shared between the divorcing husband or wife. This might be avoided by keeping the condominium in your own name.
An additional choice would be to provide your kid the funds to get the residence. If there is a divorce, the property or home would be exposed to equalization obligations to the partner however there wouldn’t be any capital gains taxes in the eventuality of a sale. Offering your kid a mortgage loan is another option to fund the purchase. It would have to be an interest free financial loan to stay away from having taxable income. In this case, you and your kid will be guarded from equalization settlement and capital gains taxes.
Think about all of the ramifications of this kind of real estate investment regardless of whether you are purchasing it for your investment portfolio or maybe to help save your child funds in rent payments.