{"id":2364,"date":"2022-09-28T14:59:00","date_gmt":"2022-09-28T14:59:00","guid":{"rendered":"https:\/\/dev.wahi.com\/wp\/?p=2364"},"modified":"2025-04-10T14:14:39","modified_gmt":"2025-04-10T14:14:39","slug":"selling-investment-property","status":"publish","type":"post","link":"https:\/\/wahi.com\/ca\/en\/learning-centre\/real-estate-101\/sell\/selling-investment-property","title":{"rendered":"Selling an Investment Property"},"content":{"rendered":"

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<\/at-text>Debating whether to sell your investment property? Check out our key considerations and step-by-step guide, and tips for selling.<\/span><\/p>\n<\/div>\n

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By Emily Southey<\/a> | 15 minute read<\/p>\n

[\/et_pb_text][et_pb_post_title title=”off” author=”off” date_format=”M j” categories=”off” comments=”off” featured_image=”off” _builder_version=”4.18.0″ _module_preset=”default” global_colors_info=”{}”][\/et_pb_post_title][\/et_pb_column][\/et_pb_row][et_pb_row _builder_version=”4.18.0″ _module_preset=”default” width_tablet=”” width_phone=”100%” width_last_edited=”on|phone” max_width_tablet=”” max_width_phone=”100%” max_width_last_edited=”on|phone” custom_padding=”21px||||false|false” global_colors_info=”{}”][et_pb_column type=”4_4″ _builder_version=”4.18.0″ _module_preset=”default” global_colors_info=”{}”][et_pb_image src=”@ET-DC@eyJkeW5hbWljIjp0cnVlLCJjb250ZW50IjoicG9zdF9mZWF0dXJlZF9pbWFnZSIsInNldHRpbmdzIjp7fX0=@” align=”center” force_fullwidth=”on” _builder_version=”4.18.0″ _dynamic_attributes=”src” _module_preset=”default” custom_padding=”2px|||||” border_radii=”on|32px|32px|32px|32px” border_radii_tablet=”on|32px|32px|32px|32px” border_radii_phone=”on|0px|0px|0px|0px” border_radii_last_edited=”on|phone” global_colors_info=”{}”][\/et_pb_image][\/et_pb_column][\/et_pb_row][et_pb_row _builder_version=”4.18.0″ _module_preset=”default” custom_padding=”||11px|||” global_colors_info=”{}”][et_pb_column type=”4_4″ _builder_version=”4.18.0″ _module_preset=”default” global_colors_info=”{}”][et_pb_text _builder_version=”4.18.0″ _module_preset=”default” text_font_size=”21px” text_line_height=”1.6em” header_2_font=”||||||||” header_2_font_size=”36px” header_2_line_height=”1.3em” header_3_font_size=”1.25rem” header_3_line_height=”1.88rem” header_4_font=”|700|||||||” header_4_font_size=”1.25rem” header_4_line_height=”1.88rem” global_colors_info=”{}”]<\/p>\n

Are you looking to sell your investment property? Unfortunately, unlike a stock or mutual fund, real estate is one type of investment that can\u2019t be sold with a few clicks of a button. In fact, selling an investment property can be an intimidating process, especially if you\u2019ve never done so before. Luckily, the experts at Wahi are here to help ensure the sale of your investment property goes off without a hitch.\u00a0<\/p>\n

–<\/span><\/p>\n

What Is an Investment Property?<\/h2>\n

An investment property is a piece of real estate purchased to generate income. Income can be earned either through rental income or simply by appreciating in value. Investment properties can be bought by a single buyer, a pair of buyers, or a group of investors.<\/p>\n

–<\/span><\/p>\n

Key Considerations Before Selling Your Investment Property<\/h2>\n

If you\u2019re wondering when you should sell an investment property, you will need to consider several key factors. Before putting your property on the market, we suggest that you ask yourself the following questions:<\/p>\n

–<\/span><\/p>\n

Is your investment property a rental property? And if so, do you have a current tenant, and did you recently sign a new lease?<\/b><\/h3>\n

If your investment property is a rental property and a tenant currently lives there, you\u2019ll have to consider this decision from many angles. First, you must ensure that the sale of your investment property doesn\u2019t interfere with the tenant\u2019s rights. For example, in Ontario<\/a>, tenants have many rights. If they\u2019ve signed a lease and the lease has not yet expired, they have a right to remain there under Ontario\u2019s Residential Tenancies Act. If you still want to proceed with the sale, you must know that the lease will transfer with the property, and you will have to make any prospective buyers aware of this. In addition, showing the property with a tenant is a little more complicated as you must provide a minimum of 24 hours’ notice before each visit. Typically, the best case scenario for selling a rental property is to wait until the current tenant\u2019s lease is up.<\/p>\n

–<\/span><\/p>\n

Are you prepared to pay the tax on your capital gain?<\/b><\/h3>\n

Another consideration when deciding whether to sell your investment property is capital gains tax. All investment property sales in Canada are subject to capital gains tax. Capital gains tax is a general tax paid to the Canadian government when you make a profit from selling something of value (for example, a stock, bond, or real estate). Capital gains tax is only applicable if you earn more from the sale of your property than you paid originally. For example, if you bought a condo in Toronto<\/a> for $600,000 in 2016 and sold it for $850,000 in 2021, your capital gains would be $250,000, and you would be legally required to report this amount on your income tax return. Before putting your investment property on the market, we suggest using a capital gain calculator to figure out how much tax you will owe on the property sale.\u00a0<\/p>\n

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\u201cAn investment property is a piece of real estate purchased to generate income. Income can be earned either through rental income or simply by appreciating in value. Investment properties can be bought by a single buyer, a pair of buyers, or a group of investors.\u201d<\/h2>\n

[\/et_pb_text][\/et_pb_column][\/et_pb_row][\/et_pb_section][et_pb_section fb_built=”1″ _builder_version=”4.18.0″ _module_preset=”default” custom_padding=”||24px||false|false” global_colors_info=”{}” da_is_popup=”off” da_exit_intent=”off” da_has_close=”on” da_alt_close=”off” da_dark_close=”off” da_not_modal=”on” da_is_singular=”off” da_with_loader=”off” da_has_shadow=”on” da_disable_devices=”off|off|off”][et_pb_row _builder_version=”4.18.0″ _module_preset=”default” custom_padding=”23px||38px|||” global_colors_info=”{}”][et_pb_column type=”4_4″ _builder_version=”4.18.0″ _module_preset=”default” global_colors_info=”{}”][et_pb_text _builder_version=”4.18.0″ _module_preset=”default” text_font_size=”21px” text_line_height=”1.6em” header_2_font=”||||||||” header_2_font_size=”36px” header_2_line_height=”1.3em” header_3_font_size=”1.25rem” header_3_line_height=”1.88rem” header_4_font=”|700|||||||” header_4_font_size=”1.25rem” header_4_line_height=”1.88rem” global_colors_info=”{}”]<\/p>\n

What are your lifestyle goals?<\/b><\/h3>\n

Any time you\u2019re thinking about selling real estate, it\u2019s important to consider your lifestyle goals. Try to remember what your goals were when you initially purchased the property. Consider the demands of your day-to-day life. For example, if you got married or started a family since you bought the property, you may no longer have the time to keep up with the demands of being a landlord. Alternatively, if you had certain financial goals in mind when you purchased the rental property, and you\u2019ve now met those financial goals, it could be a sign to sell and move on to another investment project. Finally, if you\u2019re simply tired of being a landlord or owning a rental property that hasn\u2019t lived up to your expectations, these could also be reasons to sell. Ultimately, think about whether continuing to own a rental property aligns with your lifestyle, both in the present and future.\u00a0\u00a0<\/p>\n

–<\/span><\/p>\n

What are your retirement income needs?<\/b><\/h3>\n

Finally, before selling your investment property, consider your retirement income needs. There are plenty of retirement income calculators online. Take advantage of these and determine how much you need to be earning now to live comfortably in retirement. You may discover that the income from your rental property isn\u2019t really needed to reach your retirement goals, in which case, selling could be the perfect option for you.\u00a0<\/p>\n

–<\/span><\/p>\n

A Step-By-Step Guide on How to Sell an Investment Property<\/h2>\n

If you\u2019ve considered the factors above and still feel ready to sell your property, follow the step-by-step guide below.\u00a0<\/p>\n

–<\/span><\/p>\n

Step 1: Review tenant rights and obligations<\/b><\/h3>\n

The first step if you\u2019re selling a rental property with a current tenant is to review the tenant rights and obligations in your province. As mentioned, Ontario tenants have extensive rights until the Residential Tenancies Act. If the tenant\u2019s lease has yet to expire, you do not have the right to evict them simply because you want to sell the property. Therefore, you would need to market the property as a rental property, and once purchased, the lease obligations would transfer to the new owner. In addition, you must provide your tenant with a minimum of 24 hours\u2019 notice before every showing.\u00a0<\/p>\n

–<\/span><\/p>\n

Step 2: Find a REALTOR\u00ae<\/b><\/h3>\n

Choosing a REALTOR\u00ae is the next step in the investment property selling process. Ideally, you should look for a REALTOR\u00ae with experience selling rental properties. They are likely to have a network of investors they can market the property to and will have a firm grasp of tenant and landlord rights.\u00a0<\/p>\n

–<\/span><\/p>\n

Step 3: Stage your investment property<\/b><\/h3>\n

As a landlord in Ontario, you don\u2019t have the right to stage your tenant\u2019s home. You also can\u2019t force them to do anything to their space, such as clean it or rearrange the furniture. That said, you do have the right to make minor repairs, so this could be a good opportunity to wash the carpet, repaint, or change the light fixtures. Alternatively, if the investment property is vacant, you can stage it however you like, and your REALTOR\u00ae can help.<\/p>\n

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Step 4: Scheduling showings\u00a0<\/b><\/h3>\n

When selling any type of property, you must be prepared for prospective buyers to visit. Try to be as flexible as possible with the showing schedule. However, keep in mind that if you have a tenant, you must give them at least 24 hours’ notice before a showing.<\/p>\n

–<\/span><\/p>\n

Step 5: Calculate the estimated capital gains tax<\/b><\/h3>\n

As mentioned, you are required to pay capital gains tax after selling an investment property. To avoid any unfortunate surprises, we recommend calculating your estimated taxes beforehand. In Canada, sellers are only required to pay tax on 50% of the realized profits. This means that only half of the money you earn from the sale is taxed. To calculate the capital gains tax on your investment property sale, subtract the adjusted base cost (ABC) of the property from the selling price, and then divide that number in half. The sum is the amount subject to capital gains tax. (To calculate your adjusted base cost, add the original purchase price of the property, plus the cost of any legal fees, tax commissions, and renovations.) The capital gains taxes owed will also depend on factors like your income bracket and the province or territory you reside in.<\/p>\n

–<\/span><\/p>\n

Six Tips for Selling Investment Property<\/h2>\n

Ensure the process of selling your investment property goes off without a hitch by following the tips below.\u00a0<\/p>\n

–<\/span><\/p>\n

1. Research the local market\u00a0<\/b><\/h3>\n

If you own a property solely for rental income purposes, then when you put it on the market might be flexible. In this case, it\u2019s critical to research the local housing market so you can strategically time your investment property sale. Pay attention to real estate prices and rental vacancy rates to help determine whether the local market is hot, cool, or somewhere in the middle.<\/p>\n

–<\/span><\/p>\n

2. Maximize your property\u2019s rental income<\/b><\/h3>\n

One of the biggest perks of owning an investment property is the additional income stream. Therefore, before you sell your property, maximize the rental income. If you\u2019re thinking of selling soon but aren\u2019t quite ready, make sure to increase your rent prices annually. Since the lease will transfer to the new owner, the amount of rent paid by the tenant directly impacts how much you will get for your property.\u00a0<\/p>\n

–<\/span><\/p>\n

3. Find a REALTOR\u00ae with investment property experience<\/b><\/h3>\n

When hiring a REALTOR\u00ae, find one with investment property experience. A REALTOR\u00ae that specializes in investment property can offer insights on the tax implications of selling an investment property or rent trends in your neighbourhood. They may also have a network of investors to market the property to and be able to provide an accurate projected return on your investment.\u00a0<\/p>\n

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