Selling an Investment Property: What Vancouver Sellers Need to Know

Vancouver real estate agents jacky and jacob walking downtown vancouver
Vancouver real estate agents jacky and jacob walking downtown vancouver

If you have questions about selling a revenue property, you have come to the right place! Below, we break down the most important areas that owners need to account for if they are considering selling an investment condo or property in Vancouver.

Investment Property: Definitions

Any piece of real estate you might own besides your primary residence is considered an investment property. It could be a single-family home, townhouse, condominium, lakeside cottage, or holiday property. In the Vancouver area, the most common form of investment property is condos.


Investment property metrics are measured by the Capitalization Rate or “CAP” rate. This is the net income produced by an investment property in relation to its value.


An example of a 10% CAP Rate would be a property valued at $2 million today that produces $20,000 in net income. Ten years of operation would be required for the property to produce enough money to cover its operating costs, which are 10% of the asset value or the selling price.


Selling an Investment Property: What Vancouver Sellers Need to Know Sellers investment property

Source: CBRE

Difference Between Sale of an Investment Property and Residential Property

The process of selling an investment condo or property is not the same as selling your home. More often than not, the sale will not be driven by emotions (think about the challenge of trying to sell your childhood home) but is instead driven by bottom lines and profits.

There are also several different challenges that the sale of investment property poses in comparison to a residential property.

If your investment property is leased or tenanted, you might have limited access to the space even when you want to sell.  The realtor and property owner will have to work around the tenant’s schedule and fill them in when times are booked with prospective buyers.  Since tenants will not realize any benefit from the sale of the property, they can be uncooperative with schedules.

Vancouver bc


Also, if tenants are currently in the building, realtors and owners will have to rely on their cleanliness and furniture being in the space.  Again, this could work in your favor or work against you as you are trying to show off your investment property.  It’s always possible to consider offering to pay for someone to come in and clean your space for your tenants if you want to make the best impression.


A regional issue that might affect the sale of your investment property is provincial laws, which govern rent values, and residential tenancy laws. These both can affect the attractiveness of your investment property to potential buyers.  Consider these factors when pricing your investment property and do the math to make sure your asking price is a good value both for you and your future buyer.

Selling an Investment Property: Tax Consideration

A capital gain is a rise in the value of an investment above its initial purchase price, such as stocks, shares in mutual or exchange-traded funds, or real estate. You have a capital gain if the asset’s value rises, and you must pay tax on that gain. Gaining profit from selling your revenue property is always a positive of the process, and capital gains tax should be seen as a necessary cost in this process.


Simply explained, you pay tax on 50% of the net profit when you sell an investment property in Vancouver. In contrast to corporate income, you are taxed on the whole amount of this income.


For instance:

You spend $400,000 to purchase real estate in Vancouver to utilize as an investment.

You sell it for $650,000 after five years. On that property, you have now generated a profit of $250,000.

Of the $250,000 profit, $125,000 (or 50%) will be taxable to you. In the 26% tax bracket, your taxable income will be about $32,500.


Considering that this is only a rudimentary explanation of how capital gains operate, you should speak with a tax accountant to get professional tax advice regarding your investment property.

Non-resident Tax Implications

You still must pay taxes if you own investment property and are a non-resident of Canada. You must withhold Canadian non-resident withholding tax on the sale of any property, whether a house, condo, or other type of real estate. 


The purchaser is required by the CRA to retain back 25%, or in special circumstances 50%, of the transaction price. 


The CRA will request you to provide a 25% withholding tax payment on the net capital gain, as opposed to 25% of the final sale price.  This withholding tax payment will be due when you file for a “Certificate of Compliance.”


Since you can write off your selling expenses on a Canadian T1 tax return and pay at Canada’s marginal tax rates, which are typically much lower than the 25% withholding tax, you will be eligible for a sizable refund of the taxes that the CRA withheld. The procedure essentially compels you to pay your taxes since failing to do so would result in a sizeable donation to the government.

Investment Property: Deductible Expenses

You can write off certain expenses incurred when you sell an investment or rental property from your taxes. Advertising, broker fees, legal costs, and repairs undertaken as part of the sale are some examples of these deductible selling expenses.

Realtor fees

One of the largest expenses that is paid by the seller of a rental property is the real estate commission and realtor fees.  Luckily, these expenses are tax deductible for investment properties, unlike residential properties, and reduce the overall taxable net income of the property.


Another common tax-deductible expense that comes up during the sale of an investment property is any repairs that might be needed before the sale can go through.  Any repairs or maintenance requests from the seller are considered selling expenses.

Should I Renovation Before I Sell?

A common question a lot of investment property owners have is whether they should renovate their property before they sell. There are both pros and cons to deciding whether or not you should renovate your investment property before a sale. While the location and appeal of your market are factors outside your control, upgrading and improving the usability of your property can raise its value and make it more desirable to purchasers who are ready to pay more.  These expenses are also tax deductible. The downsides of deciding to renovate your investment property include lost rent during renovations and the ability to gain access if your space is currently leased.  Unlike an empty property, if you have tenants or businesses leasing your space, you need to give them either time to find another place to stay or establish a schedule with them to complete the renovations while they are still living in the space.  This can drastically affect your timeline depending on the amount of renovations.

Selling An Investment Property In Vancouver Doesn’t Need To Be Complicated

Vancouver has seen amazing growth in its property market over the past few years.  This might mean it is the perfect time for you to sell your investment property.  Making sure that you are aware of the tax obligations and how to reduce this figure can drastically help you make a better return on your investment.

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Jacob & Jacky
Our Vancouver real estate team has earned the trust of our clients by consistently putting their best interests first. We understand that selling your home is a major investment and we approach every transaction with the utmost care and attention. With us as your Vancouver REALTORS®, you can rest assured that you are in good hands. We know that trust is the key to client satisfaction and we strive to offer the best customer service possible, which includes empathy, active listening and a friendly, positive attitude. Our goal is to get the job done right, while ensuring you have an exceptional home selling experience throughout the process.

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