CASHING IN ON YOUR HOME

Is converting all or part of your home into a rental property for you? With websites such as Craigslist and Airbnb, it’s never been easier to post your property and get matched up with tenants.

“It can be a great way to put your home to work for you and generate revenue, but it’s not without risks,” says Guy Anderson, senior financial consultant at Parkview Financial and Investment Planning Counsel. “Sometimes there are capital costs involved in converting your single-family dwelling to a rental. There’s also upkeep and maintenance. And you have to factor in the likelihood that there will be times when the unit will sit vacant with no income.”

It’s a part-time job that can consume lots of time and energy, adds Jason Pereira, a senior financial consultant at Woodgate Financial Inc. & Investment Planning Counsel.

Pereira recommends doing the math to ensure it makes financial sense when you factor in time and expenses, including reserving at least 1 per cent of the value of the house annually for maintenance.

Anderson reminds those thinking of renting to understand the tax implications. “Rental income is fully taxable, which can affect your tax credits for retired individuals. If a house is used solely as an income property, you may have to pay tax on capital gains when you sell.”

And if you’re thinking about renting because you’re an empty nester and your home is too big, consider that it might make better financial sense to downsize and invest your profits elsewhere, says Pereira, as well as saving you work, time and energy.