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Selling the family home and renting

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This situation may occur when the client wants to sell the home (100%) at a future time and live off the proceeds.  Naturally, the client's lifestyle will be lower in the pre-sale time period because he has no rent to pay.  Once sold, the lifestyle must be higher to include rent.  Also, he wants to die-broke, passing nothing on.

Here is the procedure...

Pick the age at which the sale will occur.  Let's say it is in 10 years time.

Next, smooth sucessively at a high enough level until you reach a level that causes the RRSP/nonreg capital to just last to a year or two beyond this date.

Now, enter the smoothing amount that you finally fixed on, down the 1st column of the de grid, from the top cell down to the time of the house sale, leaving the rest of the column blank.

Finally, examine the size of the house value, assuming you have entered the value of the home in the death benefit column.  Enter that amount in the 'non taxable income expense' column and zero the rest of the death benefit column down to the bottom.

Then, amortize.

The solution should solve and result in the house proceeds (plus the small residual capital that was left before the house sale) sustaining the post-sale lifestyle.  Hopefully, the ATI post-sale will come in higher than the pre-sale amount.  The difference between the pre and post sale ATIs will represent the yearly rental costs, resulting in a true 'die-broke, no estate' solution.

Warning.... this only makes sense when the subject has a large home value in relation to his current savings. If the post sale ATI comes in lower than the pre sale ATI, then you will have to change the strategy to one where the rental cost is entered as a 'net income target additive' amount in the de grid starting at the point of the house sale, leaving the ni target (1st column) completely empty .

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Fimetrics Systems Ltd.           sales-support@fimetrics.com           Tel: 1-800-663-4088