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Great comment DMAC. The model shows what will happen if rates go up 1% and condo prices are flat. Rents paid are definitely factored in the model as are taxes.
by corcoran2015 11y ago
Great comment DMAC. The model shows what will happen if rates go up 1% and condo prices are flat. Rents paid are definitely factored in the model as are taxes. The investor is in a TFSA & RRSP which means capital gains are a non-issue. Property taxes cant be avoided though. Its a real advantage of investing in Canada to use the RRSP & TFSA vehicles.
You're right, mortgages can typically be locked in for five years.
But really people can check out the model and use their own assumptions:
https://docs.google.com/spreadsheets/d/1ZJnbA2MO7iuQc4xEX9E2NJZETddZG0oM3rVd6zLoV7g/edit#gid=1187439665 https://docs.google.com/spreadsheets/d/1ZJnbA2MO7iuQc4xEX9E2...
- DMac87 11y ago1. RRSP & TFSAs have limits much lower than the assumed contributions, so there are tax differences between the two alternatives. 2. Even slight tweaks to your assumptions (e.g. reduce investment returns to 6%, increase condo returns to 2%) equalize the two scenarios. If you're going to use such an ill-conditioned model, you really must spend significantly more time justifying all of its assumptions, or else show sensitivities to them.