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Lisa's Corner
Boomer vs Millenial -Real Estate Version
If you’re a Baby Boomer, there’s a good chance you own a house that people in younger generations would love for you to sell, but there’s also a good chance that you have no intention of moving. According to a recent study by Morning Consult, 79% of Boomers polled said they had no need to move, and don’t plan on doing so. Considering many in that generation are living longer, healthier lives, and own their houses outright, they’re quite comfortable staying put. But if you fit that profile, you may at least want to consider doing some renovations…. The study also revealed that Boomers haven’t updated their houses in many years, and they have very little intention of doing any updates in the coming years. Nearly 70% of them own houses that are over 30 years old, and have never done renovations or replaced major appliances, and they have no plans to make any type of home improvements. There are plenty of reasons why Boomers might not want to, such as: To avoid the stress. Home renovations are often disruptive to live around, and the process can be less than fun when dealing with contractors and delays. They don’t want to “waste” the money. Despite many Boomers having a lot of equity in their home, and possibly savings, they might not want to spend money unless they feel it’s necessary. They feel their home is fine just the way it is. People get used to living in the condition their house is in, and might even like the look and feel of it and have no desire for a change. They might not realize their house isn’t updated. When people think about a house that hasn’t been updated in decades, images of 1970’s shag carpet and faux-wood paneling might come to mind, but 30 years ago is actually just the 1990’s. Even if a kitchen or bathroom was updated in the early 2000’s, those updates are almost a quarter century old, even if it feels like it wasn’t all that long ago to a homeowner who has lived in the home for decades. Younger Buyers Would Like You to Update Your Homes Younger home buyers would appreciate two things from the Baby Boomer generation: Sell your houses sooner than later. Update them before putting them on the market. According to a recent article in REALTOR Magazine, younger buyers (particularly Millennials) are concerned that they’re going to be stuck having to renovate the homes of Boomers… once they finally get the opportunity to buy them, that is. They’re concerned that they won’t even be able to afford the renovations, considering that house prices are already stretching their budgets as far as they can go, so they’d like Boomers to do it before they sell. It’s easy to understand why they feel that way, but it’s not really fair to expect Boomers to do anything about it, either. The Baby Boomer generation living in their houses longer may very well be a reason why younger people are lacking options and affordability, but it’s certainly not any one Boomer’s responsibility to solve an overall housing crisis by updating their home and selling it. As the saying goes, it’d be a drop in the bucket. Everyone has a right to live how they want to live. If you’re a Boomer and you’re happy and comfortable living in your home just the way it is for years to come, then why should you do any updates or renovations to your house? Well, perhaps because it’s a great opportunity that you might miss out on if you wait. But You Might Want to Update It for Your Own Benefit When will the majority of Baby Boomers sell their houses? It’s anyone’s guess, really. Year after year there are predictions that it’s going to happen soon, but it never seems to happen to any large extent. But one thing’s for sure, at some point, a whole lot of Boomers will be selling their houses at the same time, and the odds are it’ll impact their ability to get their house sold as quickly, or for as much money as one who sold before a huge wave of them decided to sell. There’s been such a shortage of houses for sale for so long that it’s easy to forget that supply and demand have a huge impact on real estate values. Since there haven’t been enough houses to satisfy the demand, it’s been easy for Boomers to get their houses sold quickly and for top dollar, without having done one bit of updating or renovations. But if enough Boomers start to sell their houses at the same time, not having an updated house could certainly impact how much you get for your house, how long it’ll take to sell, and even if it’ll sell at all. With that in mind, here are some reasons to update your home, and ideally sell it sooner than later: An increase in supply of houses for sale could cause home prices to dip, which could impact your equity and ultimately your net worth, which you may be counting on to fund your retirement or living expenses as you age. If you wait and it becomes necessary to update or renovate in order to compete with other sellers, getting the work done could become more difficult if there is more demand in an already strained home improvement industry. Even if you have little or no competition, updated homes sell faster, and typically for more money. However, before you dive into any updates, consider speaking with a local real estate agent you trust. It may just make more sense for you to sell your house as-is now, than go through the effort and expense of making the improvements. Depending upon where you live, and the price range your home is in, there’s a good chance you could have a lot of demand, and even multiple offers for your house, without doing an ounce of work, which could save you a lot of money, time, and stress. A knowledgeable agent can help you assess the current market value of your home, the demand for it, and advice on what (if anything) you should renovate or update before listing your home for sale, whether it’s now, or in the future. The Takeaway: The majority of Baby Boomers have no intention of selling their home anytime soon, nor do they plan on doing any updates or renovations to their home before they do eventually sell. On the other hand, younger buyers, particularly Millennials, would not only like them to sell their homes sooner than later, but they’d like them to update their houses as well. It’s not any one Boomer’s responsibility or concern to address the lack of inventory for younger buyers, or their desire for an updated house. However, updating (and possibly selling) could benefit a Baby Boomer who acts now, rather than waiting for a wave of other sellers in that generation to hit the market, creating more supply and competition.
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Winter is Here. Are you prepared?
As the days grow shorter and the temperatures drop, winter is undeniably upon us. For those living in Calgary, Canada, this means it's time to start thinking about how to prepare your home for the chilly months ahead. Whether you're a buyer, a seller, or simply looking to enhance your winter lifestyle, there are several steps you can take to ensure your property is ready for the season. **For Buyers:** If you're in the market for a new home this winter, it's crucial to consider how well a property can withstand Calgary's harsh winters. When touring potential homes, pay close attention to the insulation and heating systems. A well-insulated home will not only keep you warm but also help reduce energy costs. Check for drafts around windows and doors; these can be signs that the home may need additional weatherproofing. Additionally, inquire about the age and condition of the furnace. A reliable heating system is essential for surviving Calgary's coldest months comfortably. Don't forget to ask about any recent maintenance or upgrades that have been done to improve energy efficiency. **For Sellers:** If you're planning to sell your home this winter, taking steps to winterize your property can make it more appealing to potential buyers. Start by ensuring that all windows and doors are properly sealed to prevent drafts. This simple step can significantly improve your home's energy efficiency and comfort. Next, consider having your furnace serviced before listing your home. A well-maintained heating system is a strong selling point for buyers who want assurance that they won't face unexpected issues after moving in. Additionally, clear any snow and ice from walkways and driveways to create a safe and welcoming environment for showings. **Lifestyle:** Winter in Calgary doesn't have to mean hibernation. Embrace the season by making your home a cozy retreat from the cold. Start by adding warm textiles like blankets and rugs throughout your living spaces. These not only add comfort but also help retain heat. Lighting plays a significant role in creating a warm atmosphere during the darker months. Consider adding soft lighting options such as table lamps and candles to create a cozy ambiance. If you have a fireplace, now is the perfect time to give it some attention—clean it out and stock up on firewood for those chilly evenings. Don't forget about outdoor preparations as well. Ensure that gutters are clean and free of debris to prevent ice dams from forming. Trim any tree branches that could potentially break under heavy snow and cause damage. Lastly, stock up on essential supplies such as salt or sand for icy walkways, extra blankets, and non-perishable food items in case of severe weather conditions that might keep you indoors for an extended period. By taking these steps, you can ensure that your home is prepared for whatever winter throws its way—whether you're buying, selling, or simply looking to enjoy the season in comfort. Winter in Calgary may be cold, but with proper preparation, it can also be one of the most beautiful times of year.
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The Canadian Tax Court’s Decision on Airbnb Properties: What it Means for Short-Term Rental Owners
With the rising popularity of Airbnb, Canada has seen more homes converted into short-term rental properties. Recently, however, the Canadian Tax Court has introduced rulings that significantly impact the tax obligations of property owners who operate these rentals. The crux of these rulings: properties once used primarily for personal use or long-term renting but now shifted into short-term rental can be classified differently, leading to increased taxes and potential restrictions on tax benefits. Here are some key takeaways: 1. Change in Property Classification In some recent rulings, the Tax Court has shifted certain properties from the "personal-use property" or "investment" category to "business" or "income-generating assets." This reclassification happens if it’s evident that the property is operated as a business rather than just occasional rentals. If a property owner is managing multiple listings, coordinating bookings, and providing services like cleaning, this is a business-like operation in the eyes of the Tax Court. 2. Impact on Principal Residence Exemption Many Canadians assume that their homes qualify for the principal residence exemption, which shields homeowners from paying capital gains taxes when they sell their primary homes. However, if a property primarily generates income through Airbnb, it may disqualify the owner from claiming the exemption. This could lead to substantial tax implications upon sale, as any appreciation in the property’s value would be subject to capital gains tax. 3. GST/HST Obligations The Tax Court’s decisions have clarified that if a property is consistently rented for short stays (generally less than 30 days at a time), it may be subject to Goods and Services Tax (GST) or Harmonized Sales Tax (HST). Typically, residential properties are exempt from GST/HST, but short-term rental properties operate in a gray area that can require them to charge GST/HST. Owners who exceed the $30,000 annual income threshold from rentals are required to register for GST/HST, charge it on stays, and remit it to the CRA. 4. Deductibility of Expenses The ruling has provided clearer guidelines on what expenses are tax-deductible for short-term rental owners. Expenses tied directly to property maintenance, advertising, and other operational costs are generally deductible. However, deductions linked to capital improvements or expenses benefiting personal use must be carefully separated. Owners with mixed-use properties (part rental, part personal use) are required to apportion these expenses, and excessive claims can result in audits and penalties. What This Means for Airbnb Hosts Higher Scrutiny and Compliance Requirements: With the Tax Court’s decision, the CRA is expected to scrutinize short-term rentals more rigorously. Airbnb hosts should maintain detailed records of rental income, bookings, and expenses. - Loss of Certain Tax Benefits: Properties used primarily for Airbnb or other short-term rentals may lose the principal residence exemption and could be reclassified as business properties, which impacts capital gains treatment upon sale. - Need for Professional Tax Advice: With these tax implications, working with a tax professional is essential for short-term rental property owners to maximize their deductions legally while complying with Canadian tax law. The Future of Short-Term Rentals in Canada As these rulings gain visibility, Canadian homeowners may reconsider converting properties to short-term rentals, particularly in cities with tight housing markets. Property owners should weigh the benefits of short-term income against the potential tax liabilities and added administrative burdens. For now, careful planning and a solid understanding of the tax rules surrounding short-term rentals are essential for Airbnb hosts to thrive in this evolving regulatory landscape. --- This decision marks a significant shift in how the Canadian government views short-term rentals, with ripple effects for hosts, homeowners, and the broader rental market. Property owners must now be more diligent than ever to navigate this complex tax environment. Please consult a tax specialist.
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Lisa Kauffmann
Real Estate Associate
old-1715758436452-sold@lisakauffmann.ca
# 700, 1816 CROWCHILD TRAIL NW., CALGARY, Alberta, T2M3Y7, Canada