My_question_is: Canadian-specific
Subject: Flipping Houses
Expert: taxman at centa.com
Date: Thursday April 20, 2006
Time: 10:08 PM -0700
QUESTION:
I read with great interest the information you provided regarding capital
gains, however, I would like some more specifics on "flipping houses".
My husband and I have owned our home for 6 years. We are currently in the
process of selling our business and we would like to fix and sell houses as
our next project. Could you please tell me if this is a worthwhile venture?
This would be my husband's full-time job and we intend to fix and re-sell
within a one to two month time frame.
I appreciate your wisdom!
Cheers,
-------------------------------------------------
david ingram replies:
The biggest problem with flipping house is finding a large enough spatula.
However, done well, you can make a good living. In a down market you can
lose your shirt and pants as well.
If you make money, it is straight income, if you lose it is a straight loss,
no capital gains treatment when renovating houses.
It was virtually impossible to lose money as a renovator in the last four
years.
However, that market is now turning in different places all over North
America. Whether the Olympics is capable of keeping the BC market up is a
matter of conjecture.
The economy in Alberta and BC is so strong that one would think so,
However so many people bought with 3.5% mortgages which are coming due at 5
and 6% that it is bound to slow the market as people are forced to sell who
do not qualify to renew.
Be careful with what you buy and don't get carried away with the exuberance
of your realtor. Buy homes with the right things wrong. Buy homes that
need cosmetic work where you can move a shrub, install a new chandelier and
paint.
Stay away from anything that requires structural or foundation work unless
you or your husband is a structural engineer. It is almost impossible to
find serious trades to do any work for you at the moment when there is a
serious problem.
============
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