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QUESTION: We are considering purchasing a lakefront property to be used as a rental now and in 5 years time, we will move into it as our principle residence. It could be rented year round. We have a good down payment and live in the same town. The question, not really a tax question but I realize you are also a real estate expert is this: would it be a good investment? (The property is in a heavy tourist area.)
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David Ingram replies:
I am answering the investment question separately after answering the unasked tax part of the question first because of its importance.
I think that any waterfront property is a good investment. However, I have two waterfornt lot situations in my immediate file where the waterfront lot cannot be built on and therefore has little sales value. One is on a Gulf Island just down the road from Senator Pat Carney and the other is very nicely situated five minutes from downtown Madeira Park in Pender Harbour. Both lots are bordered by nice homes.
The problem of buying a lot with no building is that environmental rules have changed and can still change in the future. The lots mentioned can not be built on because they require septic tanks and there is not enough land to support a septic field under current rules. In other words, the lots failed the "perolation" test.
The existing houses would also fail the test but are grandfathered in. Therefore, buy the waterfront property if it has an occupied building on it. AND If you have a fire or something, rebuild within 90 days (check local rules) or you could end up with a vacant lot you cannot build on.
I also know of the same problem all over the province on Bowen Island, horsefly Lake, etc.
Good luck!
David Ingram of the CEN-TA Group
Real Estate Taxation Specialists
US / Canada / Mexico Tax and Working Visa Specialists
108-100 Park Royal South
West Vancouver, BC, CANADA, V7T 1A2
(604) 913-9133 - Fax 913-9123 [email protected]
www.centa.com www.david-ingram.com
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