Downsizing in the Tri-Cities: Moving from a House to a Condo or Townhouse

Moving from a family house to a condo or townhouse can free up equity, cut down on upkeep and put you closer to shops and transit. It is also a big move, financially and emotionally. Here is how to plan a downsize in the Tri-Cities, step by step.

The short version

Start with how you want to live

Before you look at listings, picture an ordinary week in your next home. Questions that help:

• Space. How many bedrooms do you need for guests, hobbies or a home office, and will your favourite furniture fit?
• Stairs. Would one-level living or an elevator building suit you better in the years ahead?
• Location. How close do you want to be to family, shops, health care, parks and transit?
• Outdoor space. Is a balcony enough, or do you want a patio or a small garden?
• Parking and storage. How many parking stalls do you need, and is there a storage locker?

Coquitlam and Port Moody have SkyTrain stations near shopping and services, and each Tri-Cities community has its own feel. I compare them in Coquitlam, Port Coquitlam or Port Moody?

Work out the numbers

• Your home's value. Base it on recent sales of similar homes, not your assessment. I explain why in BC Assessment vs market value.
• Selling costs. Commission, which is negotiable and has GST on top, plus legal fees, discharging your mortgage and any prepayment penalty.
• Buying costs. Property transfer tax on your next home: 1% on the first $200,000, 2% on the portion up to $2 million and 3% above that, plus a further 2% on the residential portion over $3 million. There is no general exemption for seniors or downsizers. Add legal fees and moving costs.
• Monthly costs. Strata fees, insurance, property taxes and utilities, plus a cushion for any special levies.

If the house has been your principal residence for every year you owned it, the gain on the sale is generally tax-free. You still have to report the sale on Schedule 3 of your tax return and designate the home as your principal residence on Form T2091(IND), and filing the designation late can bring a penalty of up to $8,000.

Choosing your next home

Most condos and townhouses are stratas, so the building matters as much as the home. Read the depreciation report, the minutes and the contingency reserve fund balance to see what repairs are coming and how they will be paid for. I go through the documents in the strata documents to read before buying.

• Age limits. BC stratas can still pass bylaws that require one or more residents of each home to be 55 or older, if you want that kind of building. Existing residents and live-in caregivers are exempt.
• Pets. Check the pet bylaws before you write an offer. If the strata has no pet bylaw of its own, the standard limit is one dog or one cat, plus some small animals.
• Accessibility. Look at the entrance, elevator, hallways, bathroom layout and parking, now and for the future.

Sell first or buy first?

Selling first tells you exactly what you have to spend, while buying first secures the home you want. Matching completion dates, a subject-to-sale offer or short-term bridge financing can help close the gap. I cover the options in Buying and Selling at the Same Time.

Credits and programs worth knowing

• BC home renovation credit. If you are 65 or older, or have a disability, BC's refundable Home Renovation Tax Credit for Seniors and Persons with Disabilities covers 10% of up to $10,000 a year in eligible accessibility renovations to your principal residence. Work on both the home you sell and the home you buy can count, within the same $10,000 yearly limit.
• Federal Home Accessibility Tax Credit. A non-refundable credit on up to $20,000 a year of eligible renovation expenses, for people 65 or older or eligible for the disability tax credit.
• Home Owner Grant. Owners 65 or older can claim a larger grant on their property taxes. I explain it in the Home Owner Grant and property tax deferment.
• Property tax deferment. If you have deferred property taxes, the balance must be repaid when you sell, so find out the amount before you list.

If your old home will sit empty for a while after you move, check whether BC's speculation and vacancy tax could apply, since the Tri-Cities are in a taxable area.

Sorting, selling and moving

• Start early, one room at a time, beginning with the spaces you use least.
• Measure your new rooms and plan where your furniture will go before moving day.
• Decide what to keep, give to family, sell or donate, and ask family to collect their things.
• Pick completion and possession dates that give you time to move without rushing.

Questions homeowners often ask me

Do I pay tax when I sell my house to downsize?

If it was your principal residence for every year you owned it, the gain is generally tax-free. You still have to report the sale on your tax return and designate the home as your principal residence.

Is there a property transfer tax exemption for seniors in BC?

No. BC has exemptions for first-time buyers and newly built homes, among others, but there is no general exemption for seniors or downsizers.

Can a strata building in BC be 55 plus?

Yes. A strata can pass a bylaw requiring one or more residents of each home to be 55 or older. Some people are exempt, including residents who lived there before the bylaw and live-in caregivers.

Should I sell my house before buying a condo?

It depends on the market and your finances. Selling first gives you certainty about your budget, while buying first secures the home you want but can leave you carrying two properties for a while.

Are there tax credits for making my new home more accessible?

Yes. If you are 65 or older, BC's refundable credit covers 10% of up to $10,000 a year in eligible renovations, and the federal Home Accessibility Tax Credit applies to up to $20,000 a year in eligible expenses.

Ready to see where you stand? Request a free home evaluation and read my seller's checklist.

This article is general information, not tax or legal advice. For BC's renovation credit, see the Home Renovation Tax Credit for Seniors and Persons with Disabilities.