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Discussion Starter #1
Hi everyone,

Last summer my family and I moved into a new bigger house but just couldn't sell our old house!

We used 2 realtors, hired a professional photographer and had the house for sale for about 8 months. (We were also trying to rent the house at this time)

After paying 2 mortgages for 8 months and having one house sitting vacant we decided to rent the house to family friends. The rental income is very low - $1000 per month. The house selling market still doesn't look promising this spring.

I need help understanding DEEMED DISPOSTION.

If we set last summer as the time of deemed dispostion (changing from primary residence to rental house) we can claim rental losses for the time the house was vacant. We did not hire a house appraiser last summer, so can we use the listing price from the realtors as the Fair Market Value price ? How do we set the FMV ? Or do we use the ACV formula with regards to the number of years the house was primary residence compared to being a rental house?

Do I need to contact CRA in regards to changing over the house from primary to rental? Or do I just file this paperwork once the house finally sells?

Am i correct that I can claim a Capital Loss or Capital Gain based on the selling price and the FMV price at the time of the deemed dispostion?
 

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Any house can sell... as long as the price is right. If you are willing to take a $100,000 loss, you will have an offer the next day. It's all about price. Realtors don't do jack these days. Everyone uses MLS to search themselves.

Sometimes $100k loss is better than subsidized rent and double mortgage emotionally. You can at least know what your loss is... whereas the other option is an ongoing loss with no cap.
 

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Offer incentives to the realtors to sell your house over others - one good way is to offer a higher percentage for realtor fees. This will encourage the listing agent to do more to sell your home, and encourage more viewings from other realtors.
 

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If you are converting to a rental, you should get a qualified appraisal price ASAP. The appraiser may be able to give you an adjusted price for the date the house became a non-principal (deemed disposition) residence. You cannot use the listing price as the FMV nor generally even the Tax Assessment price (though the latter may be better than nothing). Talk to the appraiser about this.

You only need to declare cap gains or losses when you sell the property... on your tax return for the year of sale.

I agree with the other posters that a house will always sell at the right price. With internet access these days, and a good MLS description and professional photography, everyone can compare pretty well and can judge what an appropriate price is. If a house is listed for more than 110% of its competitive price, many/most potential house buyers will just pass on by. I've purchased and sold 10 of 11 houses in my lifetime. I avoid any house where the owners have a considerably higher opnion of their house than that of the competition.
 

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Discussion Starter #5
So I'm pretty sure the house will sell this Spring. The house price was competitive and its my opinion that the house will sell.
I also agree with the posters that if your listing price is low enough than the house will sell. But is it really worth losing thousands of dollars?

Is there any other method of setting the FMV? I'm just in the process of getting an appraiser in to my house.

Can anyone confirm the +1 rule for Principal Residence Exemption? If the house sells this year I believe its still elegible to be tax exempt?
 
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