Curb your enthusiasm

[Dropp the Pilot]

If you are coming to EK from Canada or the States do not under any circumstances sell your home.

I just stumbled across this on a retirement planning site and it affirms what several colleagues here have stated to me recently.


"You should keep a home in Canada because it is the only way you can come close to guaranteeing that you can afford a house/home here when and if you return.

The number of people i know who sold their Vancouver area home and went to Saudi or Kuwait or Dubai for six or seven years of tax-free earnings and are now coming back and finding that it will cost them more to buy back their house then they earned in total is extreme. For instance, my house in Vancouver went up over $600,000 since Aug 13, 2002. If i had worked tax free in Dubai for $100,000 a year in that time, and saved every single cent, I would need every single cent of my Dubai earnings to buy my house back. How silly / stupid is that? if i had, heaven forbid) spent half of my $100,000 a year for mundane things like rent in Dubai, food in Dubai, a couple of vacations to get away from it all, and maybe a car, I would come home $300,000 short to buy my house back. As I said, how stupid is that? and i know or have talked to a 100 people in that position who are now out of the market. A lady confessed to that situation on air on the radio program last Sunday.

No one leaving the country for work abroad should ever sell their Canadian house unless it is just (for some reason) a bad property to rent. If that is the case, they should sell their home and buy equivalent value rental real estate to ensure that they will ."

This is a very true and potentially life-changing aspect of the expat experience that is not often addressed.

[FlyingCroc]

A waste of time really here in the sandpit, the sooner you get out the better. But not easy, believe me. Smart thing would be to keep the house and pay tax and mortgage in the US or Canada and save the rest. I messed that up :{

[sioux115]

That had been my plan all along if I were to accept a position with EK. My main motivation was we were always planning on having rental properties in the future. Great point about the market though, I haven't really thought about how much it will cost to buy back in down the road. May just have to kick the renters out!:ok:

[Panama Jack]

As lawyers disclaim for investment funds "Past performance is no indication of future returns."

Likewise, the housing market in the last 10 years has seen unprescendented growth, much of it based on speculation. Canadians going abroad may have to contend with that keeping a house in Canada makes the difference of being taxable in Canada and not being taxable. It's all a gamble. In your case it would have paid-off keeping it, but who knows what the outlook is 10 years from today? The question is whether you expect your Canadian home to go up in value on average $100,000 per year. Personally, I think that while there is some natural growth in property values, the rise we've seen over the last few years is a bubble and all bubbles eventually burst. That will be primarily dictated because Canadian incomes are simply not keeping pace with the rise in property values.

Besides, depending on where you live, the difference in the cost of homeowners insurance can be astronomical depending on whether you are also residing near where your property is or far far away. At one point, I owned a small bungalow that I considered keeping as a rental property, however, few insurers would consider coverage if I was living outside of Canada and the insurance premiums from those that did meant that the rental would not cover the insurance costs alone (nevermind the other issues such as property tax, maintenance & upkeep, etc).

[Trader]

Keeping a property or properties in Canada does not necessarily make you a resident. If the properties are rented, non-arms length (ie. to someone other than family), then it is an investment. You will pay tax on any profit made on that investment but that is all.

We sold our house and bought a condo in downtown Toronto. Stable market,, income and we keep a foot in the Cdn market - whichever way it goes :) The nice thing about a condo is that it is reletively maintenance free.

[scanscanscan]

Yes and you could also consider selling the house and invest the proceeds in land on the outskirts of a majour city.

[menard]

Dropp

This is your own saying on the 14th of Feb, when you posted on the "EK: Anything EVER better?" thread.

"When I came to EK I had $20,000 and now I have $1,800,000.

My wife thinks that's better, but she is covetous."

Please, explain me, I don't understand.

If I refer to the above, what your stating in this thread doesn't quite make sense to me !