Should I Sell My Rental Property or Keep It?

Should I Sell My Rental Property or Keep It?

Owning a rental property in Calgary or elsewhere in Canada can be a smart way to build wealth, generate income, and diversify your investment portfolio. But eventually, many investors hit a fork in the road:

“Should I keep the property — or sell and reinvest elsewhere?”

The right answer depends on more than just market trends or cash flow. It’s about aligning real estate with your overall wealth management strategy, time commitment, and long-term goals.

Here’s how to evaluate the decision from both a financial and strategic lens, with tips from a financial advisor in Calgary.

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1. Start with the Numbers: What’s Your True Return?

Owning rental real estate can feel profitable — but emotion and tax complexity can cloud the math.

Your real return should account for:

• Net rental income (after mortgage, taxes, insurance, maintenance, property mgmt)
• Annual appreciation
• Mortgage principal paydown
• Opportunity cost of your equity
• Taxes on rental income

Compare this return to:

• After-tax stock/bond portfolio return
• Corporate investment growth
• Alternative investments (private credit, REITs, etc.)

At MRG Wealth Management, we help clients quantify their real return on equity — not just cash flow.

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2. Consider the Liquidity and Flexibility Trade-Off

Keeping the property:

• Locks capital into a single, illiquid asset
• May limit your ability to rebalance, shift income sources, or make lifestyle moves
• Can be hard to divide in estate planning

Selling:

• Unlocks capital to reinvest in a diversified portfolio
• Simplifies your life (no tenant or property issues)
• Gives flexibility to fund retirement, gifts, or debt reduction

Ask yourself:

Is the return worth the effort and illiquidity?

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3. Factor In Tax Implications

Selling a rental triggers:

• Capital gains tax (50% of the gain is taxable)
• Possible recapture of CCA (if you claimed depreciation)
• Impact on OAS clawback or marginal tax rate in the year of sale

Smart financial planning can help mitigate this through:

• Timing the sale over multiple years
• Using capital losses
• Donating appreciated assets to charity
• Investing in a tax-efficient portfolio post-sale

We can coordinate with your accountant to build a tax-smart exit plan.

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4. Evaluate Long-Term Fit in Your Wealth Management Plan

Keeping a rental may make sense if:

• You’re in a strong appreciation market
• The property cash flows well and is hands-off
• You want to leave it to heirs who value real estate
• It’s part of a corporate strategy (e.g. held in a HoldCo)

Selling may make sense if:

• You want to simplify and diversify
• You’re approaching retirement and need liquidity
• Your risk tolerance or time availability has changed
• The return doesn’t justify the risk or hassle

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5. What to Do with the Proceeds If You Sell

This is often the biggest missing piece.

Selling without a financial plan = cash drag or reactive decisions.

Selling with a wealth management strategy = improved performance, lower risk, better outcomes.

Proceeds can be redeployed to:

• Discretionary investment portfolio (diversified, liquid, tax-efficient)
• Corporate investment strategy
• RRSP/TFSA top-ups
• Gifting or family trust structures
• Private investments with better liquidity or yield

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Make the Right Move for Your Wealth and Lifestyle

At MRG Wealth Management, we help Calgary professionals, business owners, and retirees evaluate whether keeping or selling real estate supports their broader financial goals.

As your Personal CFO, we bring investment, tax, and lifestyle factors together in your integrated wealth management plan to give you clarity — not just calculations.

Book a strategic review to see whether your rental property still belongs in your long-term financial plan.