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House Hacking

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Eli Crapper
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House Hack Fourplex vs. Renting all Units and Staying in my Current Rental (Canada)

Eli Crapper
Posted Mar 1 2024, 14:48

Hi. I am a Canadian first-time home buyer and have just purchased a fourplex. I am trying to decide if I should live in one of these units vs. renting all 4 and continuing to rent at my current house. For context, I am a doctor with a stable income and was able to put 20% down comfortably to avoid insurance. If I can make more income from renting the unit at my new fourplex compared to what I pay now in rent what are the downsides of not living there? My mortgage has been approved saying that it would be owner-occupied though my broker told me there is no real consequence of just not living there once it's already been approved. Other than having a quarter of the property (purchased for $850,000) qualify as my primary residence are there other benefits, tax or otherwise, are there of living in the property? Everyone seems to advocate for househacking but why would you do this when you can get rent cheaper somewhere else nearby? I have been looking everywhere for this topic and have not found any advice on this.

tldr. Why would I live in my rental property when I can rent it for more than what I am paying for rent now?

Thanks!

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Stevo Sun
  • Calgary, AB
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Stevo Sun
  • Calgary, AB
Replied Mar 1 2024, 17:32
Quote from @Eli Crapper:

Hi. I am a Canadian first-time home buyer and have just purchased a fourplex. I am trying to decide if I should live in one of these units vs. renting all 4 and continuing to rent at my current house. For context, I am a doctor with a stable income and was able to put 20% down comfortably to avoid insurance. If I can make more income from renting the unit at my new fourplex compared to what I pay now in rent what are the downsides of not living there? My mortgage has been approved saying that it would be owner-occupied though my broker told me there is no real consequence of just not living there once it's already been approved. Other than having a quarter of the property (purchased for $850,000) qualify as my primary residence are there other benefits, tax or otherwise, are there of living in the property? Everyone seems to advocate for househacking but why would you do this when you can get rent cheaper somewhere else nearby? I have been looking everywhere for this topic and have not found any advice on this.

tldr. Why would I live in my rental property when I can rent it for more than what I am paying for rent now?

Thanks!

Technically what your mortgage broker is telling you is considered mortgage fraud. Specially you been a doctor, there is a lot more to lose for you than the average joe. Things do happen and plans change so typically the bank will not care if payments are made. As to your primary residence exemption, if you don't live there and you claim primary residence exemption that would be tax fraud. This would carry a lot more consequences since this is the CRA and you are trying to avoid pay taxes.

Not sure who is giving you advice, but I would be careful.

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Eli Crapper
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Eli Crapper
Replied Mar 2 2024, 08:32

I was saying that I would NOT be claiming it as my primary residence and asking if there are other tax benefits to living there. In terms of the mortgage is there an amount of time you do have to live there? surely they can't make you live there the entire time. If i was to airbnb for part of the year and live there part of the year would that qualify?

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Stevo Sun
  • Calgary, AB
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Stevo Sun
  • Calgary, AB
Replied Mar 3 2024, 06:04
Quote from @Eli Crapper:

I was saying that I would NOT be claiming it as my primary residence and asking if there are other tax benefits to living there. In terms of the mortgage is there an amount of time you do have to live there? surely they can't make you live there the entire time. If i was to airbnb for part of the year and live there part of the year would that qualify?

Just to add a bit more, if you are looking for tax benefits like they have in the US ( for example where you can deduct expenses against your employment income in certain cases), unfortunately we don't have that in Canada. If you are losing money on the rental then you might be able to deduct the loss against employment income, but that's not really a tax benefit.

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Cody Neustaedter
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  • Real Estate Agent
  • Winnipeg MB, Canada
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Cody Neustaedter
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  • Real Estate Agent
  • Winnipeg MB, Canada
Replied Mar 4 2024, 14:06

Hi Eli! Have you looked into home insurance? Typically the rates change depending on if you are occupying the property or not.

The reason most people talk about house hacking is because of the benefit of lowering your expenses. If you don't live in the property and continue to rent you may increase your income but your expenses are also higher, even if its a net positive. The benefit on that is you don't get taxed on money you save. You do get taxed on income you make. If you save an additional $12000 per year that's $12000 more in your pocket. If you make an additional $12000 through rental income the government is going to tax that income. It really does depend on the numbers but I would personally rather be paying down my own mortgage than throwing money away through renting a different property.