Thinking of Selling a Cabin or Investment Property? Get it Done Before June 25th or Face Higher Taxes.

For owners of investment properties or cabins who didn’t pay close attention to Tuesday’s federal budget announcement, there are some changes that you’re going to want to talk to your accountant about.  In the past, only 50% of the capital gains on the sale of your investment properties or other non-principle residences (like cabins) exceeding $250,000 were subject to taxation, but as of June 25th, that number is going up to 66%.

In my opinion, this change is not significant enough to dissuade people from purchasing investment properties and cabins in Yellowknife, mainly because we do not have a high rate of annual appreciation on property of any kind in our market – investment properties are appealing here mainly because of our high rental rates and the annual income generated from these rents, not because of appreciation of the asset.  That is why there is very little property flipping that goes on in our market compared to places like Vancouver, or more recently, Calgary.

But that said, this change will impact anyone who was already planning to sell an investment property or cabin.  Unless you want to be taxed at the higher rate, now is the time to sell.  And unless I’m mistaken, it won’t be enough to just have an unconditional offer by June 25th (which we Realtors typically consider to be the sale date), you’ll have to actually close the deal by that date.  So you’ll have to move quickly.

Don’t hesitate to reach out to a member of Yellowknife’s #1 real estate team if you need assistance with your sale!