Better check your condo bylaws. You may not be able to rent out your suite. A client of mine is facing legal fees and having to deal with a tenant that she is not allowed to have. This is an expensive lesson to learn. Do your homework first.
Here is a quick list of what you need to do before renting your condo out:
- check the bylaws and advise strata council
- advise your insurer, this is very important as you may not be covered for a problem if the insurer does not know the condo is being rented
- contact BC MSP. You must let them know that you are leaving the province for more than 6 months. . Here is the relevant information. http://www.health.gov.bc.ca/msp/infoben/leavingbc.html
- contact the city to change the status from principal residence to rental unit. If you live in BC , you will lose the homeowner grant and have to pay higher property taxes.
- if you are only going away for a few years and may come back, you can make an election with CRA to keep your principal residence status and therefore protect your tax free capital gain. Here is how it works.
When you start renting a home, there is a change in use from personal residence to rental property and capital gains from that point on would generally be taxable unless you file a special election to continue to designate the property as principal residence for up to 4 years even if you do not live in it. It is very important to file the election in the year of change in use otherwise there will be taxes on the capital gains when the property is sold. The special election is called “Section 45(2) election.”
Please make sure to talk to us when you move or make a change in use of a property. We can help!