If your cottage has been in the family a long time, chances are its value has increased. This means when it comes time to pass ownership of the cottage to another member of the family, the taxes owed can be significant. Always keep in mind that the new owner will have to pay a tax of half the cottage value appreciation above base cost. Planning ahead can mean something as simple as starting the transition earlier. “Parents can place their children on the cottage’s deed as co-owners early, triggering the capital gains tax now and spreading it out in phases so that the tax bill is smaller when the property is fully transferred.”
As Ontario’s cottage country ages, its largest generation of owners faces challenges in handing down their properties. Cottages in communities such as Muskoka and Haliburton may no longer be passed down, because the children of baby boomers may not be able to afford the capital gains taxes.
If your cottage has been in the family a long time, chances are its value has increased. This means when it comes time to pass ownership of the cottage to another member of the family, the taxes owed can be significant. Always keep in mind that the new owner will have to pay a tax of half the cottage value appreciation above base cost. Planning ahead can mean something as simple as starting the transition earlier. “Parents can place their children on the cottage’s deed as co-owners early, triggering the capital gains tax now and spreading it out in phases so that the tax bill is smaller when the property is fully transferred.”