Why plan the disposition of your multi-residential property before your big departure?
Death can occur unexpectedly, however, in some cases, illness or old age gives us a glimpse of that fateful moment in advance. Although it is not a subject that one likes to discuss, one day or another, no one escapes it. Better to prepare for it as best you can. This is especially true in the case of an income property owner. One of the responsibilities worth taking care of before your big departure is the judicious planning of the disposition of your buildings.
There are several reasons for proceeding with selling upstream, such as advanced old age, rather than leaving the burden to your succession. Here are a few :
1. Pay less tax
We often hear people raging against taxes in our entourage, especially when it comes to the annual tax period! Know that your heritage will not be spared from taxes if you do not plan the sale of your properties over the years. Upon death, all of a person’s assets are subject to taxation, as they are considered sold at fair market value. The heir will therefore be obliged to pay tax on the capital gain of the building at the next tax period. The more properties you have, the higher is the capital gain, hence the greater the tax payable. Thus, the best thing is to organize your property sales gradually over time to settle your taxes easily and during your lifetime, so as not to leave these thankless tasks to your estate.
2. Take advantage of a seller’s market
The real estate market is a dynamic and constantly changing sector, with its ebbs and flows. As the saying goes: “After the rain comes the sunshine”. Well, the same goes for real estate. When the good weather returns and real estate takes the tangent of a seller’s market, it’s time to sell one of your income properties based on an assessment made with an impartial building appraiser. If you are satisfied with the amount of the capital gain since the purchase of your property, do not hesitate and sell immediately!
3. Avoid conflicts within the succession
Money is divided much more easily than real estate. If your disposals of assets are well orchestrated before your death, as well as your taxes and debts duly paid, all that remains is for your notary to authenticate your will drawn up according to your terms to distribute the inheritance. This is the key to avoiding confusion over the will’s plan and conflicts within the succession, because you will have ordered the separation of monies between your family members according to your wishes.
4. Maintain control of the transaction
Owners often refer to their multi-residential property with endearing nicknames like « my baby » and with good reason. Major savings have been invested in it, they have maintained it for several years and they know every corner of it. In short, there is no one as knowledgeable about their building as a long-time owner. That being said, there is no one in a better position to sell it than you. A good real estate broker can be very helpful, but there is no doubt that you know the condition of your property better. You are also better placed than your succession, generally less versed in real estate overall, as well as with the particularities of the building in question. In addition, by selling your asset yourself, your property will be disposed of to a new owner of your choosing. Thus, your building and your good tenants that you hold dear will be in good hands that you will have chosen yourself to replace you.
In short, it is essential to take matters into your own hands sooner rather than later when planning the sale of your income properties. You can definitely start planning your arrangements long before you retire, with the help of a wealth management specialist. Moreover, being experts in the acquisition of multi-residential properties at Belanger Real Estate, we can give you the concrete facts regarding the transaction of your real estate complex, as a partner and buyer of choice. Contact us to find out how our company can assist you in planning your assets’ dispositions over a short to a long term, all depending on your situation and what life has in store for you.