Closing our “real estate” chapter

And that wraps up our 11-year journey with rental properties!

Today’s blog is more about my personal financial planning, but with having seen so many planning scenarios similar to mine, I thought it could be helpful to some to understand the tax consequences and advantages of selling.

We made the decision a couple of years ago to sell our properties. The decision was made at a time when nothing “bad” had happened, the investments were doing well, but that’s exactly why we were doing it. Waiting until the investments are “down” (things going wrong) can affect the selling price significantly. Similarly to why you wouldn’t exit your stock portfolio when there are fear and instability, which most people can understand.

We were selling because we saw that with adding kids into the mix (our boys are now 2.5 years old and 3 months), and being both business owners, something had to go. We realized that although Richard had enjoyed the revitalization of those spaces, bringing them from vacant for 10+ years to clean and functional again, that part was done years ago and we were now sitting on equity that could be re-allocated to other types of assets.

So, we sold the first three properties in 2025, and the last one in September 2026. Last year’s sales came with a tax bill of course, which was reduced by using our partial primary residence exemption (we lived in 2 of the homes), maximizing our RRSPs, and minimizing extra dividends from our corporations.

With this last sale, the tax planning involves maximizing our RRSPs again, paying our tax installments on time (calculated using current year method), and clearing our shareholder loan balances so that we don’t need to claim company dividends in 2026. The proceeds paid back to our corporations will be invested in corporate investment accounts, which allows us to continue building wealth much more passively.

Sometimes I wish we focused on funding our TFSA accounts from the beginning, as that growth would’ve created more TFSA room over time. The TFSA is truly an underestimated investment tool. However, I realize real estate was part of our journey for a reason, and trying to do everything all at once is rarely the best way to go about things.

Cheers to (actual and real) passive income – and happy September to you.