How to sell your second home

There are lots of reasons for selling a second home. You may be looking for a change, going through a separation, or noticing the property value has gone up. In some regions, the price of cottages and condos has doubled , which is advantageous for sellers.

When it’s time to sell your second home, it’s important to choose a real estate broker who knows the area well. Knowing the area means your broker can assess the property value based on the market and similar properties that have recently been sold there.

Next, it’s time to prepare the home, which can range from tidying up to major decluttering, from changing some old lights to repainting rooms. This is also a great time to do any minor repairs and renovations, as they will increase the value of your property in the long run.

Once your property is listed on Centris.ca, be sure to share it on your social media. Maybe someone you know will be interested!

Check out our complete guide to selling a property to learn the essential steps.

 

Documents to prepare when selling a second property

The documents you’ll need when selling your second residence are more or less the same as for any other property.

• Certificate of location
• Declarations by the seller (renovation contracts and invoices, electricity bills)
• Collateral transfer
• Inspection reports
• Purchase agreement
• Tax bills
• Notarial deeds and documents related to the building
• Declaration of co-ownership (if applicable)

If your cottage isn’t connected to a sewer network or water supply, you’ll also need to provide water quality test results for the well, as well as a septic tank layout plan that’s been approved by your municipality. Make sure to include your invoices for septic tank maintenance.

Tips and tricksIf your second home is several hours away, try scheduling visits from multiple prequalified potential buyers on the same day. Everybody saves time!

 

The costs of selling a second home

In addition to the tax implications, there are costs associated with selling a second home. For most people, the costs are the same as for selling any other house, including notary fees and the real estate broker’s remuneration.

If your second home is far from a major city, it probably needs an artesian well, in addition to a septic system. However, wells and septic systems both require testing, so you can get that done before you even put your property up for sale.

For the home inspection and the different analyses, ask your real estate broker if it’s a better idea to do these additional tests in advance and cover the costs. This strategy could help everyone avoid delays and last-minute negotiations.

Tips and tricksMake sure you have the maintenance and inspection invoices for your septic system as proof that you’ve kept it in good condition.

 

Be careful about flipping homes

Flipping a house for an investment has been in vogue for many years. But be careful! It’s not as easy as you may think. Buying a house that could be considered a second home and selling it at a higher price in a relatively short time frame (flipping) is a fairly complex real estate transaction. Flipping a house is especially complex now because of the anti-flip tax, under which capital gains are taxable at 100%. You must have owned the property for more than 12 months at the time of sale for it to be exempt from this tax.

Understanding the ins and outs of selling a second home is essential for success

Even if selling your cottage is just an idea for now, you can maximize the sales potential of your second home with excellent advice from a real estate broker.

 

Frequently asked questions (FAQ)

1. What is a change in use of a property?

When the use of a property changes (for example if you lived in your house all year and decide to move into your cottage so you can rent out the house), it is called a change in use. The house you previously occupied is now considered a source of income.

2. How do I avoid paying tax when selling a second home?

There’s a tax exemption for principal residences. If you have designated your second home as your principal residence and you, your spouse or one of your children lived in it, even for a short period of time, you may be exempt from paying capital gains tax on the sale. Of course, we recommend consulting a professional (tax, accountant, real estate broker) for more information.

3. How long do you have to occupy a principal residence before selling it?

In Canada, there’s no fixed or minimum period you have to live in a residence before selling it. However, certain parameters need to be met before you can benefit from capital gains and tax exemptions.

You may have heard about the 12-month rule, which relates to flipping homes and the anti-flip tax. When you sell, you must have owned the property for a minimum of 12 months so that your profit isn’t taxed at 100%.