So I was asked a question recently that I think is important to cover here. 

A client of ours owns a rental property that they're looking to sell, and they were wondering if it was a good idea to do so. They were calling me because they wanted to know how much tax they'd pay if they sold that property. 

But before we got to that, my question to them was, do you want to sell? 

Tax is not the first criteria about whether or not you should sell a property, investments, or anything similar to that. The first criteria should be whether or not you want to sell them. Are you enjoying managing your rentals? Is that something that you like? Are you afraid of not having that steady stream of income? 

Now, in the case of my client, they weren't making a whole lot of money. Their properties were continually degrading and last year they only made somewhere around $1000. The gain on the rental that they were going to sell was going to be $75,000 - that's essentially 75 years worth of 2020 income. You could take the money from the sale, roughly 200K and put it into a safe investment, or even into a GIC and make almost as much as they did renting while doing absolutely nothing. 

Specifically, they were selling it for a couple hundred thousand dollars, so even a GIC at 1% would net them more money than what they're actually bringing in with net rents.

Tax should not be the primary reason for you to do something or not do something. Tax is an afterthought. That doesn't mean you shouldn’t tax plan, because that is definitely something that you should do, it’s just not normally where you start. 

Immediately selling your rentals without thought is never a good idea. The right thing to do is to call your accountant and make sure that what you’re planning is going to be okay, and not going to catch you in a trap that you weren't aware of. 

Still, nine times out of ten, tax is something that’s just going to happen and you simply have to deal with it. Dealing with it properly and tax planning properly for it is important.