Navigating passing your cottage down to your children can be tricky, especially when it comes to taxes. The Globe and Mail reported on a few options. One is to consider it your principal residence and use the PRE (principal residence exemption) to alleviate some of the costs. Another is to, "Take advantage of the 'capital gains reserve' in our tax law. This provision allows you to report a taxable capital gain over a period as long as five years." Speak to a professional about your options to gain peace of mind.