Selling a second home in Quebec: It’s easy!
Are you thinking of putting your cottage on the market, but have heard that selling a second home in Quebec is complicated? It’s really not. Armed with the right information and a game plan, you can stop putting it off. Here's what you need to know before you start.
In this article, we go over the entire process with Martin Desfossés, real estate coach at DuProprio.
Primary vs. secondary residence
The place where you spend most of your time is considered your main residence. A second home is usually a place you go to get away, or for vacation—a cottage or condo, for example.
“The place you occasionally visit could become someone else’s main residence,” explains Martin Desfossés. “Today, cottages are no longer hard-to-reach, poorly maintained three-season dwellings at the end of a dirt road. There are second homes worth $2 million. A “cottage” can be in Montréal, Outremont or an expanded suburb like Longueuil, Saint-Jérôme or Saint-Hilaire. Many people are making their cottage their primary residence and their city place their second home!”
The designation is fluid, according to what the home is used for, and this can change over time. However, it’s important to ask yourself which is which when planning to sell one of your properties.
Tax impact: Why it's important to do your homework!
A home’s designation is important at tax time. If you declare the sold property as a second home, half of the capital gain (profit minus certain deductions) will be taxable, whereas your main home would be exempt.1
You must indicate your property’s status on your tax return by year periods. Even a home you occupy only a few weeks a year can be deemed your main residence. This can be an advantage when filing the return but can have repercussions when you sell your second home.
Financially, the distinction between a primary and secondary residence requires an in-depth analysis. According to Mr. Desfossés, “Before you sell, it’s a good idea to consult a tax professional to optimize your situation and determine which choice is the most advantageous.”
So how do I sell a second home?
The belief that it is more work to sell a second home is a myth, according to the real estate coach. The same steps need to be taken prior to the sale, regardless of the type of property. One person's vacation home can become another person’s dream home.
Documents to have on hand
As for the paperwork required, the 7 documents you need to give information to a potential buyer or for when you go to the notary are essentially the same as for a main residence:
- Declaration of the seller
- Property tax, electricity and gas bills
- Declaration of co-ownership (if a condo)
- Copy of the offer to Purchase
- Certificate of localisation
- Mortgage discharge
- Previous deed of sale
If your property is not connected to a city’s water supply or sewer system, add these documents to the file:
- Artesian well: the results of a water test. This costs about $100 and you get the results in just a few days.
- Septic tank: the layout plan approved by the municipality. If you don't have the document, contact your municipality. The law requires that septic systems be inspected and emptied on a regular basis. If the system is not functional, the municipality will have that information.
- Invoices for renovations done over the years.
Is your cottage several hours away from your main home? To avoid making unnecessary trips, prequalify your potential buyers:
- Ask questions
- Invite them to explore the area to see if it meets their expectations
- Make a list of serious buyers
- Schedule all the visits on the same day
What is your property worth? A market analysis will tell you!
In addition to the above documents, a serious analysis is vital to set the right asking price for your second home. When you sell without an intermediary, DuProprio’s appraisers can gather data in a report for you. This report is included with some of the packages. You can also call on a chartered appraiser. Their services will cost around $500 or more, depending on the property.
“Beware of real estate brokers offering to estimate the value of your property,” says Desfossés. “It will be a non-objective opinion, based on their own interests. It is not an appraisal by a certified professional.”
Another important thing to remember: under no circumstance should you base your asking price on the municipal assessment. It can be used to get an idea of the annual property taxes, but not to determine the home’s value.
For more information: 3 reasons why appraisers are key to setting your price
The best asking price for a second home
As a homeowner, you want to get 100% of your property’s value. It is possible to get the highest added value, whether you own a primary or secondary residence.
“What’s the best asking price? It’s what the property is worth!” explains Desfossés. “Basically, it’s the maximum market value. It’s not a precise number because one buyer will be willing to pay more than another. You want to attract those who are willing to pay!”
To attract a motivated buyer, set up winning conditions:
- Learn, read, be accountable
- Conduct an accurate market analysis
- Focus on visibility by listing on a dedicated real estate website
- Set a price that is justified by supply and demand, but is also competitive (price lower than similar houses for sale in the same area)
Setting your asking price by using similar properties is a method of choice for a realistic estimate of your property's value.
Can I hope to sell quickly?
Absolutely! The market for second homes has been booming for several years now, and selling times are similar to those for main residences.
Properties outside major urban centres are also incredibly popular when telework is possible. Many buyers are looking for a hybrid option, a place where they can continue their professional activity while enjoying a better quality of life.
Not so complicated after all!
As you can see, selling a second home is not so complicated! With the right documents, a solid market analysis, the help of professionals (like a tax specialist) from the outset and a good strategy, you are very likely to sell.