There are three types of personally owned real estate that can be entered; Principal Residence, Recreational Property and Investment Property. Any growth associated with your client’s Principal Residence will not create a tax liability. However, any growth associated with Recreational or Investment Properties will create a tax liability based on the Value and Cost Base each year. If the client owns more than 3 properties you must group the excess properties into one of the 3 categories or add it to the Other Assets area.
*In some cases, it is possible that a client wishes to downsize or Liquidate real Estate Holdings to assist in funding their retirement. The software will not automatically liquidate fixed assets, instead RazorPlan will calculate the retirement assets required and compare this amount to the client’s total assets. This can be seen on the Financial Assets Chart. In most cases, this allows you to look at the effect of liquidating fixed assets without the need to enter a physical liquidation. If you wish to show a downsizing/liquidation, enter the required data through the Liquidation Drill-Down 
.
Value: Enter the value of any personally owned real estate.
Cost base: Enter the current cost base of the selected real estate properties. The software will utilize this amount when calculating the tax liability from an estate and net worth perspective. As the principal residence is not subject to taxation, cost base is not required.
Mortgage Balance: Enter the current outstanding mortgage value of the selected property. The software will automatically pay down the mortgage based on the Interest Rate and Monthly Payment entered.
Interest Rate: Enter current interest rate associated with the client’s mortgage. This is a static rate, compounded semi-annually, that will remain until the mortgage has been reduced to zero.
Monthly Payment: The software allows for a monthly mortgage payment only. For clients who are paying weekly or bi-weekly, you will need to adjust their payments to reflect an equivalent monthly payment.
Need more help with this?
Contact Razor Support