Capital Gains on investment property, MLS descriptions without details


Dear David,

I currently own a 2-storey rental home with a mortgage on it. I would like to sell this property and buy the bungalow next door as a rental. If I am able to do so, will I have to pay capital gains on the sale? Also, will I need to pass a new “stress test”? – DECISIONS, DECISIONS

DEAR DECISIONS: This may not be the best format in which to answer a potentially complicated question, but I will do my best to offer what I can. Generally speaking, a homeowner is exempt from paying capital gains on their principal residence, though to say for sure, one would need to know how you are filing your taxes each year. If you currently occupy the 2-storey (or have in the past), the property may be classified as part residence and part rental. A dual classification may mitigate the amount of capital gains you’ll owe on the property, but it won’t eliminate your tax obligation completely. I urge you to speak to your accountant about this. As a tax professional, he or she can advise more accurately on which rules apply to you.

With regards to buying the bungalow next door: even if you plan to “port” your existing mortgage, purchasing this property will require the bank to register a new mortgage. As such, you will be subject to current “stress test” rules. Before deciding what to do, I would suggest you seek pre-approval from a mortgage specialist to find out where you stand. If you would like a referral, I’d be happy to recommend one of our mortgage advisors.


Dear David,

I’ve been looking at properties on the MLS System. Why do some listings have full descriptions of the homes, while others have only a line or two? – EAGER READER

DEAR READER: This discrepancy in information is frustrating for the public and Realtors alike. It comes down to how much effort has gone into marketing the property. The property descriptions on the MLS System are provided by the listing agents.

As you might expect, some agents make a concerted effort to write enticing, detailed copy that they hope will capture the interest of potential buyers. Others take a quick and dirty approach. If you see a listing that looks like it has potential, but the description offers little more than “Roof 2015, close to expressway”, it’s probably saying more about the agent than it is about the house.