Posted in BC Mortgages, Best Rate Mortgages, British Columbia Mortgages, buy vs rent for students, Canadian Economy, Canadian Mortgage News, Kamloops Mortgage Broker, Kamloops Mortgage Broker - Lisa Alentejano, kamloops mortgage financing, Kelowna Mortgage Broker, Kelowna Mortgage Financing - Lisa Alentejano, Mortgage by Lisa Alentejano, Salmon Arm Mortgage Broker, salmon Arm mortgages

Condo for the studious kid?

Summer is drawing to a close and if the student in your household is studying in Toronto, they may be moving back into residences or private rental accommodation.

However, some parents are choosing to buy a place for their offspring, and perhaps some friends, to live in for the duration of their studies. While it may sound like a great investment, your financial planner will be getting you to ask some tough questions.

Ask yourself: “Can we afford it?” says Carol Bezaire, vice-president, tax and estate planning at MacKenzie Financial in Toronto, who reccomends planning ahead by asking: “‘What are we going to do with this property if our child doesn’t go to school or drops out?’ Down the road if the child decides they want to stay in the place, ‘What kind of arrangement with the child are we going to have?’ ”

Ms. Bezaire recommends getting legal and tax advice when drawing up an agreement between you and your child. If you charge your child rent, they can write it off as a tax credit. However, you will need to record the rent as income on your return and you will be liable for tax on any capital gain when you sell the property. If space will be rented to non-family members, Ms. Bezaire says, you must get tax advice on operating a business rather than a personal arrangement.

The type of housing stock available may also affect the rent-versusbuy decision.

“As a market investment, condos have definitely grown exponentially. In Q2, we had 9,445 condos sold,” says Pauline Lierman, senior research analyst, Urbanation in Toronto. A lot of that is due to the fact that students have a desire to be in the city, but there is a shift away from the houses that are broken down into units. “Families are moving back in and buying them and converting them back into singlefamily units, so you’re getting areas where there isn’t as much supply of the traditional type of student-ghetto housing.”

Some parents – particularly from overseas – have been planning ahead.

“Some projects have been very successful in their marketing to forward-thinking families,” says George Carras, president, RealNet Canada. “They may consider that, ‘My child is much younger, we like Canada and we’d like them to come to school in Canada. So let’s just invest in the condo as possible accommodation.'”

Mr. Carras says such purchases tend to be focused around University of Toronto’s and George Brown’s main downtown campuses.

“You can start to see some of the development acquisitions and interests taking place further north,” Mr. Carras says. “For Seneca, [there’s interest in] some of the growth that’s taken place in and around the Sheppard corridor. You’re within a reasonable distance to the school but you’re also accessible to public transit.”

While your child studies, many new and resale condos will come up for sale in the GTA. Mr. Carras and Ms. Lierman both say continued population growth, coupled with a decline in single-family home construction, means there will likely be decent demand should you decide to sell the condo when your child graduates.

Advertisements

Author:

Finance/mortgage industry professional located in the Interior BC First Time Buyer Challenged Credit Second Mortgages Line of Credit Refinance Renewal Lets talk about your financing needs today! Great rates and Great Service!

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s