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Parents of university-bound kids may wonder if it’s wise to buy a condo or local property for them. You might even consider renting it out when they’re not there. Nicole Ewing, Director, Tax and Estate Planning, TD Wealth, joins Kim Parlee to discuss the pros and cons.
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- If your child is headed to post-secondary school out of town, you may be wanting to think about some creative ways to handle their housing situation, and that is the latest question we have for today's Ask MoneyTalk. We're joined by Nicole Ewing, director of tax and estate planning at TD Wealth. Nicole, question is, should I buy a condo for my child to use while in school and rent it out when they're not there?
- A very good question, and it will really depend on your personal circumstances. So if we step back and we think about the pluses or the positives here, of course, knowing where your child is going to be living and that it's a safe and secure environment is a big plus. You also won't have to go through the question every year about where they're going to stay. You'll know what those costs are and you can potentially, if there's extra rooms, rent them out to your children's friends and help pay off the mortgage and reduce those costs.
So there are costs to think about as well. We need to think about condo fees and realtor costs and all of those things that go in, moving, that need to be factored in. But we need to think about it long term. So perhaps you have another child who will be coming along not far behind and will be able to move them in, and that will amortize some of those one-time costs over a longer period and potentially make that a more affordable option.
- All right, what are the cons? What do you need to think about on the other side of things?
- Well, you know, of course, firstly, the unknown, which is not knowing what those fees are. And once you've bought the property, now it's yours and yours to deal with. So if we also think about, you know, if we want to vacate that property for a little while to have the kids coming home for the summer and rent it out to a third party, being cautious that we are sure we can have those people removed if they choose not to. And depending on the laws of your province, it can be very hard and a very lengthy eviction process. So thinking about whether that makes sense to offset the charges.
As well with Airbnb or one of those other rental platforms for short term, we still need to think about whether or not there's any local laws that would need to have a permit in order to rent those out, whether or not your income would need to be-- the income from the Airbnb would need to be included in your overall income. So again, some math to do here.
And as I mentioned, the condo fees might go up. There could be some unexpected expenses. And without our principal residence exemption, we don't have some relieving tax provisions there. So, as always, I would suggest working with your professional advisor, speak with your lawyer, speak with your financial advisor and have them advise you about what an appropriate strategy would be for you in your particular circumstances.
- Nicole, always a pleasure. Thanks so much. That's Nicole Ewing, director of tax estate planning at TD Wealth. And we'd love to hear from you. What's your question? Send it in to moneytalk@td.com.
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- If your child is headed to post-secondary school out of town, you may be wanting to think about some creative ways to handle their housing situation, and that is the latest question we have for today's Ask MoneyTalk. We're joined by Nicole Ewing, director of tax and estate planning at TD Wealth. Nicole, question is, should I buy a condo for my child to use while in school and rent it out when they're not there?
- A very good question, and it will really depend on your personal circumstances. So if we step back and we think about the pluses or the positives here, of course, knowing where your child is going to be living and that it's a safe and secure environment is a big plus. You also won't have to go through the question every year about where they're going to stay. You'll know what those costs are and you can potentially, if there's extra rooms, rent them out to your children's friends and help pay off the mortgage and reduce those costs.
So there are costs to think about as well. We need to think about condo fees and realtor costs and all of those things that go in, moving, that need to be factored in. But we need to think about it long term. So perhaps you have another child who will be coming along not far behind and will be able to move them in, and that will amortize some of those one-time costs over a longer period and potentially make that a more affordable option.
- All right, what are the cons? What do you need to think about on the other side of things?
- Well, you know, of course, firstly, the unknown, which is not knowing what those fees are. And once you've bought the property, now it's yours and yours to deal with. So if we also think about, you know, if we want to vacate that property for a little while to have the kids coming home for the summer and rent it out to a third party, being cautious that we are sure we can have those people removed if they choose not to. And depending on the laws of your province, it can be very hard and a very lengthy eviction process. So thinking about whether that makes sense to offset the charges.
As well with Airbnb or one of those other rental platforms for short term, we still need to think about whether or not there's any local laws that would need to have a permit in order to rent those out, whether or not your income would need to be-- the income from the Airbnb would need to be included in your overall income. So again, some math to do here.
And as I mentioned, the condo fees might go up. There could be some unexpected expenses. And without our principal residence exemption, we don't have some relieving tax provisions there. So, as always, I would suggest working with your professional advisor, speak with your lawyer, speak with your financial advisor and have them advise you about what an appropriate strategy would be for you in your particular circumstances.
- Nicole, always a pleasure. Thanks so much. That's Nicole Ewing, director of tax estate planning at TD Wealth. And we'd love to hear from you. What's your question? Send it in to moneytalk@td.com.
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