Buying before you sell: questions, answered

Can I buy a house before selling mine?

Yes, you can buy before you sell. The two common ways are a firm purchase backed by enough financing to carry both homes for a while, or an offer that is subject to the sale of your current home. Each one shifts the risk differently, so the right fit depends on your money and timing.

Buying firm first gives you the strongest offer, but you may own two homes at once. Some owners cover the gap with short-term bridge financing or by borrowing against their equity, which the Financial Consumer Agency of Canada explains. Ask your lender what it needs to see before you write anything.

A subject-to-sale offer protects you if your home doesn't sell, but many sellers see it as weaker and may keep marketing their place. I compare both routes in my buy first or sell first guide and look at the trade-offs of a subject to sale offer. Getting pre-approved early makes either path easier.

Sources: Borrowing against home equity, Financial Consumer Agency of Canada.

What is a bridge loan and when do I need one?

A bridge loan is short-term financing that covers the down payment on your new home until the money from your old home's sale arrives. You usually need one when your purchase completes before your sale does, even by a few days, and your cash on hand can't cover the gap.

Here's a common case. You sell your Vernon home with completion on the 30th, and your new home completes on the 15th. Your sale proceeds are locked up for two weeks, so a bridge loan fills that space and is repaid when your sale completes.

Lenders set their own rules, costs and limits for bridge loans. Ask whether they need a firm, unconditional sale on your current home first. If your home isn't sold yet, a home equity line of credit is another option the Financial Consumer Agency of Canada describes, with its own risks. You can run rough numbers on my bridge calculator and compare routes in buy first or sell first.

Sources: Borrowing against home equity, Financial Consumer Agency of Canada.

How do I line up both completion dates so I only move once?

Set your sale's completion date a day or more before your purchase completes, so the money from your sale is ready to fund the new home. Then match the possession dates so you move straight from one to the other. Your lawyer or notary handles both files and needs time between them.

In B.C., completion is the day legal ownership changes hands for the purchase price, and possession is when you get the keys. BCFSA notes these two dates are not always the same day, which gives you room to plan.

• Write the dates into both contracts before either goes firm.
• Use the same lawyer or notary for both if you can.
• Ask your lender about a short bridge loan in case your sale funds land late.
• Book your movers as soon as both deals are firm.

If the dates can't line up, a rent-back or short-term rental can fill the gap. I map out a timeline in selling and buying at the same time and the move countdown planner.

Sources: Completing Your Purchase, BCFSA, Completing Your Sale, BCFSA.

General information only, not legal or tax advice. Talk to a lawyer or accountant.

What happens if I own two homes for a while (taxes, insurance, Speculation Tax)?

Owning two homes for a short stretch is common, but a few rules change. You can claim only one principal residence for B.C.'s Speculation and Vacancy Tax, the Home Owner Grant and federal capital gains, and Vernon and Coldstream are both inside the speculation tax area. Plan each one before you move.

Speculation and Vacancy Tax. The taxable areas include the City of Vernon (the Predator Ridge resort is excluded) and the District of Coldstream. The principal residence exemption goes to the home you lived in longest that year. A newly bought home is exempt in the year you buy it if you paid property transfer tax. An empty old home may need another exemption in later years, so check before the March 31 declaration.

Home Owner Grant. The grant applies to one home you occupy as your principal residence.

Capital gains. The CRA lets you treat both homes as your principal residence in the year you switch, but you must report the sale.

Insurance. Tell your insurer if a home will sit empty. I cover more in my speculation tax guide and taxes when you sell.

Sources: Taxable areas for the speculation and vacancy tax, Province of B.C., Exemptions for individuals, speculation and vacancy tax, Province of B.C., Home owner grant, Province of B.C., Principal residence and other real estate, Canada Revenue Agency.

General information only, not legal or tax advice. Talk to a lawyer or accountant.