Should i wait to sell my condo before buying my new home

[zaindo]

Have a condo thats coming up soon for occupancy (in around 2012 May) and have come across a townhouse that i like more, i will have enough money to pay for its downpayment until its built and ready mid of next year however i am in need of some advise on how to proceed.

With the pre-construction condo that i have bought, I have already paid around 50 K as per the deposit structure, I will have enough to pay for DP for this new town house, however upon occupancy i will not have a full 20% down and hence will have to pay CMHC.

I am confused as to weather if i should

Option 1: Wait until the condo closes, I sell it after that (assignment not possible) and then look for a town,
Option 2: Go get a Town now and try my best to sell the condo once its ready and closed

Condo is in North York (near Fair view mall in around 325 K range 2b) and Town house i am in love with is in Stoufville, I am not sure if selling the condo that quickly will actually put me in a loss. Just need some advise if i am overlooking any other options or am missing on some potential hazards ? I am thinking that until i wait for my condo to close and sell, the townhouse that i am looking for would have appreciated significantly in Stouffville - am i wrong in assuming that ?

I have learnt a lot on this forum and would appreciate all advise and suggestions from xperienced UB users.

Thank You in advance.

 

[cdr108]

if the TH in Stouffville goes up in price, i'd guess the same would happen to the condo near Fairview.
however, that particular TH may not be available, if it's the only one you like.

what makes that place so desirable? you don't think you'll find something else by May 2012 that will also fit your needs?

was the condo your first home?
have you also considered the capital gains tax implications, etc?

 

[zaindo]

if the TH in Stouffville goes up in price, i'd guess the same would happen to the condo near Fairview.
however, that particular TH may not be available, if it's the only one you like.

what makes that place so desirable? you don't think you'll find something else by May 2012 that will also fit your needs?

was the condo your first home?
have you also considered the capital gains tax implications, etc?

Hi CDR108, I am not sure and thats why thought i would ask for thoughts out loud as to if my condo would appreciate at the same rate as the TH in stouffville. I am sure i will be able to find more around may.2012 which would match my needs, but i was more uncomfortable about not being able to find it in the same price point as of today's market. (I am sorry if this sounds stupid - but am quite a newbie at real estate), I am not sure what is the rate at which the property value appreciates near Makhram / Stouffville area and if thats comparable to the condo that i have bought .

It is my first home and I am not sure about the capital gain tax implications, would really appreciate if you could tell me how much tax am i looking at paying if i have capital gains and how can i avoid or minimize that. Also when you mention capital gain, Is that calculated after the cost of selling (Realtor fees, lawyer fees, mortgage cancellation fess etc) or is it gross capital gains !?

The place i desirable because my family structure has changed and i now need more space, I can certainly wait and save the $$$ for now which i would other wise be spending in the owner ship cost of the TH due to low Down-payment as majority of my funds are stuck in the condo until its ready to sell, however i was wondering if the property will appreciate to a point where it would become totally unaffordable for me at the time when i am ready to buy in about 2 years.

 

[cdr108]

i appreciate your concerns but i personally don't believe there's much more room for price appreciation.
if anything, i think they're on their way down but of course, there are varying opinions on here.

i'm not an accountant (so get professional advice) but here's my understanding
if this is your first home purchase, any capital gains (CG) will be tax free.
however, the issue is that your condo hasn't been occupied before you sell, and theoretically you'll be living in your TH first.

therefore, any CG on the condo would be subject to taxation and are calculated of net.

 

[interested]

I would not take the chance. Being on the line for 2 properties should the market change as cdr has eluded to would put you in a bad position.
Basically, the option in my view is double jeoparty. If prices go up, you sell at a profit and make a profit on the town house. If you can't sell your condo
for whatever reason, you could be quite financially and emotionally stressed. I would not risk it.

I am not sure and am not an accountant either but I would have to think it would be tough if one did not move in and sold to claim a place as a principal residence.
If you had 2 properties bought at the same time, I would think only one could be claimed as the principal residence and cdr is right, you need to check
with an accountant.

 

[zaindo]

Thank You interested and Cdr - I am quite leaning towards the same direction as well. Its less risky to be in with one property for a newbie like me, If it sells for profit - bonus for me and if it doesn't i can work plan C

Also doing some dummy calculations on my end, due to having my primary $$$ in on the first pre construction condo - the interest payment on my mortgage for the first 2 years will be far more than what the property would appreciate (assuming its steady appreciated @ (2-3%) unless i did a bobo in my calculation.

It would be wise for me to go in for the TH once i have all my ducks in a row, condo sold out, good enough DP and the comfort level in my mind so i can enjoy the owner ship.

 

[js97]

FYI... there are also tax concerns.

-Capital gains tax on the condo
-First time home buyers land transfer tax rebate ( you only get to use it once)


Everyone wants to sell high and buy low.

I would try and sell my contract - so you're not stuck with 2 properties - unless you'll be able to carry it for 6 months.