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You bought your home months ago and have decided that it’s already time to make a move. There are many reasons you as a home buyer may choose to move within your first year. Whether you have made good money on your home or life changes have caused you to need a change, there is no rule when it comes to selling your property in a certain time period. Below I’ve outlined five items to consider when selling your property in the first year of purchasing.
First Time Buyer Credit
When you purchase your first property, you have the land transfer tax rebate to a maximum of $4,000.00. This credit can only be used once and counts even if you didn’t purchase the property yourself but you were on the title for a property. When purchasing your second home, this credit is gone.
Down Payment Requirements
When purchasing your first home, your minimum down payment amount is 5% of the purchase price. This down payment requirement remains the same even when selling and purchasing another property, you don’t need more than 5% down payment. Should you purchase two properties, you’re required to put 20% down on the property used as an investment.
Tax Implications
The benefit to selling your personal residence in one year is that there most likely won’t be any tax implications. If you’ve used it as a personal residence and you don’t have a track record of buying and selling properties, all that profit is yours to keep, tax-free. Make sure that you’ve changed over your driver’s license to your new address and lived in the property! This will be essential should the revenue agency come knocking.
Mortgage Breaking Costs
Depending on your situation, a mortgage can be ported into a new property with little to no expenses. However, if you’re looking to downsize the mortgage amount you’ll need to pay a penalty cost for breaking the mortgage. This amount can vary, however, it’s recommended that you speak with your mortgage lender or mortgage broker to advise on the best strategy.
Market Increases
You’ll want to make sure that the market increases cover the cost of selling your property and buying a new one. Typically you’ll want to ensure about a 5-6% increase in market value since you purchased your property. This will cover your selling costs, closing costs, and purchasing costs. In an average market with increases of about 2-3% per year, this can take between 3-4 years for it to make sense to move.
