Real Estate Talk:
Purchasing a Country Home
Considerations when buying a country home or second residence
By Joseph Marovitch
Updated November 22, 2018
A second residence in the mountains and/or by the lake is a dream retreat for many. It is a sanctuary away from the hustle and bustle of city life. It is an escape from work and the daily grind, a change of scenery, a place to rest and gather one’s thoughts, or think of nothing. It can also be fun and exciting. A mountain retreat can provide hiking trails, swimming, sailing, waterskiing, alpine skiing, bonfires at night and stars, lots of stars.
When considering a country home to purchase, there are factors that come into play that would not otherwise, if you were purchasing in the city. Most country homes are not in or near a town, therefore the house must have its own well for water and septic tank for septic situations. If the property you are searching for has waterfront, many more factors come into play such as, is the lake navigable or non-navigable (motors boats allowed or not)? Does the lake have an entrance and an exit, or is it sedimentary (meaning not enough oxygen enters the lake to make it liveable and drinkable)?
When considering a country home to purchase, there are factors that come into play that would not otherwise, if you were purchasing in the city.
When searching for a country home, these are the questions that must be answered first:
- How far do you want to drive from the city?
- Do you want lakefront?
- Proximity to your neighbours? Most buyers of second homes want privacy as this is your getaway home.
- If lakefront, do you want motorboats or no motorboats?
- Proximity to ski hills and towns?
- Number of bedrooms, bathrooms?
Once you have found that perfect home, the items to inspect and consider are:
- Condition of the house via a regular inspection
- When was the chimney last cleaned and inspected?
- Water test to ensure the well is clean and the water is potable (drinkable)
- Lake water test to ensure the lake water is bacteria safe for swimming
- Ensure the septic tank is the right size, based upon the number of bedrooms in the house
- Ensure the septic tank has been emptied. Most municipalities require the septic tank be emptied every 4 years if the house is a second residence and every two years if it is a permanent residence.
- Insure that nothing is built on designated wetlands. Wetlands are areas near a lake or river that we are not allowed to build on as it destroys the environment.
- Does the house have a working sump pump? A sump pump is a device placed in the basement of the house, below the floor. When the water table rises in the spring, the sump pump automatically pumps the rising water out and away from the house to keep it dry. A sump pump is usually required for homes by a lake.
Finally, the tax implication. In Canada a primary residence upon selling, is tax-free. Yes, you keep it all. A second residence is considered a luxury item and is therefore not tax-free. Upon selling a second residence, any gain is considered a capital gain and is taxed on 50% of the gain. If you paid $100,000 for the country home and later sold the property for $150,000, you would be taxed on 50% of the gain or on $25,000. The tax you must pay is dependant upon your income, therefore it is always a good idea to purchase the second home and place it in the name of the person in your household who has the least income, to pay less tax.
Next article: Income property
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Have a great week!
State of the market
This past week Health Canada and the Canadian Association of Radon Technologists (CARST) warned homebuyers and owners to test their homes for Radon gas, the leading cause of lung cancer. Radon is an invisible and odourless radioactive gas that can be detected in one out of every ten homes in Quebec.
Radon gas is a product of uranium in the breakdown of soil that leaks into homes through foundation cracks and other openings in the structure. In small quantities Radon can be harmless but in larger quantities it is dangerous and can be fatal over time. To find out if a property has Radon gas, there is a kit that can be purchased, or one can hire a professional to test the property.
To purchase the testing kit, go to takeactiononradon.ca
Should a property be found to have harmful amounts of Radon gas, there is a remedy. The cost is approximately $3000. The remedy is a one-time permanent repair. CARST advises all homebuyers to include in the inspection condition, a test for Radon gas. Should harmful amounts of gas be found, buyers can revise their offer to reflect the cost of the repair. It should be noted that in the event the seller refuses to adjust the price to compensate for the buyer’s expense and the buyer cancels the offer, the seller must declare the presence of Radon gas in their seller’s declaration. One way or another the seller must remedy the situation.
Read also: Real Estate Talk: With or without warranty
Joseph Marovitch has worked in the service industry for over 30 years. His first career was working with families from Westmount and surrounding areas, hosting children between the ages of 6 to 16 as the owner and director of Camp Maromac, a sports and arts sleep away summer camp established in 1968. Using the same strengths caring for the families, such as reliability, integrity, honesty and a deep sense of protecting the interests of those he is responsible to, Joseph applies this to his present real estate broker career. Should you have questions please feel free to contact Joseph Marovitch at 514 825-8771, or firstname.lastname@example.org