ownsizing rather
renting could save

OWNING A home has proved to be a profitable invest-
ment for most people over the years. Bui when your place
becomes too much to manage financially, is it better to sell
and rent or to buy a smaller lace?

“Mir. Taylor’? (it could be Mrs.
Taylor) is 75 and a widower. He
‘owns his principal residence,
worth at least $250,000.

- He’s lived there for 20 years but
the place is getting too much for
him to handle —- especially as his
income is only $11,000 a year and
he has minimal savings.
“Many people are tempted to
sell, invest the money and rent,”
said Elio Luongo, of KPMG Peat
Marwick Thorne, chartered ac-

' -‘countants.

_.. Today, he and colleague Tony

* Lobmeier wrap up our seven-part
annual series of tax-planning tips
for readers of this column.

Note: Use the information here

“=..to prompt further research on how

' the relevant strategies might apply

‘to your situation and what specific
steps you should take. In many
cases, you should also seek the
advice of a tax expert — especially
when large amounts of money
could be involved.

“Our Mr. Taylor is thinking -

about selling his place, investing
‘his $250,000 and renting an
apartment for $650a month,”
Luongo said.

‘While his personal feelings are”

important, we urge him to con-
_ sider buying a less expensive home
-. — perhaps a condominium apart-
“ ment for $105,000 — which could
“leave him better off financially.”
’. Here's why. If Taylor rents and
‘invests most of his money ina
. term deposit paying 6% with the
\: rest in-a savings account, he will
" pay about $3,770 in tax on the
$14,500 interest. -
“*As well, he must pay his rent
with after-tax’ dollars, which, by.
. the way, boosts the effective cost

to $878 a month ($650 divided by , °

0.74, reflecting his marginal tax
rate),” Luongo. said:.

. ” Add his pensions and invest:
‘ment: income, subtract his i income’
.. taxes and rent, and Taylor ends -

“up with net cash flow of $13, 500 a.

‘year: . an
‘However, said Luongo, ir

DOLLARS AND SENSE

Taylor buys the $105,000 condo,
his cost of living should be less, as
the maintenance and property
taxes will be less than the rent.

Assuming he then invests his
remaining $143,000 in a term de-
posit and savings account, he will
_pay tax of only $2,130 on ‘the
$8,200 interest.

If he pays $85 a month for the
condo maintenance and $850 a
year in property taxes, net cash
flow (with his $11,000 base in-
come) now will be $14,830.

That’s $1,330 a year —~ almost
10% more than renting and in-
vesting.

“ “He'll also have a $105,000 in-
vestment in a condominium,”
Luongo said. ‘‘If the value of his
principal residence increases, he
stands to make a tax-free gain,’

In some parts of Canada, you
have a third option: You can take
out a reverse mortgage or home
income plan which, through a
mortgage and annuity, generates a
lifetime (usually) tax-free j income
based on the equity in your home.

Taylor could use such a pro-

_ gram-either to enable him to stay

in his original home or to provide

extra income after his move to the

condo.

Here's An

-« OpenHouse -

You Won't Want ‘To
Miss.

Bank'of Montreal, Lower Lonsdale is pleased to
announce the complction of renovations and the. , .
~ installation of a NEW Automated Banking Machine.

Join us!

“Se ! ptember 30" & October 1*

9:30 -

3:30

Bank of Montreal :
21 Lonsdale Ave.
- North Vancouver
. 668-1234

. Refreshments will be served, —

Monday ; Thursday 9:30-4:00
. Friday |! ‘ 9:30 - 5:00

Instahank?- Day & Night Banking
‘ © Registered Tet of Bank of Monte

ue ee Bank of Montreal
_ We're Paying Attention. .

This would be important if, for
example, his health declined and
he needed an attendant.

Luongo suggested just such a
situation to illustrate additional
tax breaks.

“*Let’s say Taylor suffers a
stroke which leaves him partly
paralyzed and unable to speak
clearly,’’ said Luongo.

“If his ability to perform the
basic activities of daily living is
markedly restricted, he should be
able to claim either the disability
credit of $4,233, or the costs of

in a nursing home.

. “If the cost of attendant care
(for example, part-time care)
doesn't exceed $5,000 a year
($10,000 in the year of death),

- Taylor would also be able to claim

the disability credit.”

Taylor must have receipts with
the social insurance number from
the caregiver.

To claim these credits, a quali-
fied doctor must sign the T2201
disability certification form “and
Revenue Canada has the right to
review any claim of prolonged im-
pairment,’’ said Luongo.

An impairment is considered to
be prolonged if it lasts or is ex-
pected to last for more than a
year, ;

To clarify an item in last week’s
See Clarifying page 40

ALL-SEASON RADIAL
CORSA GT .

JSSRI3 95

ALL-SEASON TRACTION

| INVICTA GL

Eoin AIR MILES on ties ond service.

Ask your participating retailer,
“Tite sole ends Qct. 9, 1993.

Call fot odditional sizes and sole prices. :
Savings may vary. Up tu fout months to ae ontedil

cord purchases exceeding $2500. 0

» Authorized
AIR CARE
Repair Centre

lo

either a full-time attendant or care 1 FY

aC gn Bee

““SENANU! 3”
TWO nunared and fifly
feet of SOULHEIT exposed
waterfront. ue classic
Oyo acre Country
estate with contemporary
residence and indoor
Pool
1.475 MILLION CDN

ool

“DENISON”
one ACTE parcel with 5
separate lots
south Oak Bay
at the pinnacle orperfeet
southern exposure.

1.95 MILLION CDN

DEREK SAYWELL,
BOORMAN'S fP), 605-1595
VICTORIA, B.C,

LUBE &
R SPECIAL... wt

| 4 WHEEL BRAKE SPECIAL....... B@?”

New shoes « New pads » Repack whee) bearings * Inspect hoses, calipers and wheel
cylinders © Top off brake fluid ° Check spring: and PLE, cables" REGULAR PRICE $149.95

COOLING SYSTEM FLUSH........... BB”

Includes parts & labcaur (rn108t cars)

* TUNE-UP SPECIAL
1 BO 6 MY 5, BO

lncludes: spark plugs. adjust timing, adjus carb if necessary, check distribuior cap, rotor & leads (most cars)

~QUR POPULAR

All SEASON ARENA, Sue

PISS /BOR12 S11 BL

PISS /SORI3SUUARW
PTGS /BORT3 SLL RW
PUBS / 70844 SLL HW
PIGS /TSRE4 SL KAW”
205 / 7SRV4 SL KAW
205.7 FSRLS SDH
PANS / TSRLS SUDA

PUSS /BORI2SEL BL
235 / 75R15 SUD XRW

ALL-SEASON

PERFORMANCE
EAGLE GT+4

9

ALL-SEASON RADIAL
DECATHLON

PUSS / 9081391)

~ UGHT TRUCK AND VANS
WORKHORSE RADIAL

Size BSL

FIRS / SORI871
PIS / SORIA IY
P205/ sORIS 901
PAIS / 6SRIS 950
PRIS / ORLOSAU

235 / 75815 (6 OWL

Get $60 to $100 when you
trode-in your Set of 4 tires for a
sel of Aguatreds, Ask obout

date wie aoe Tiree ROTATION

FREE INSTALLATION

NO CASH DOWN
NO INTEREST ©

WEST VANCOUVER
675 Marine Drive (at Taylor Way) 922-3298