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.
The Victoria Day weekend has arrived, and for many Canadians, this means a trip to the cottage to enjoy the place – and perform some maintenance. My neighbour, Walter, is heading to his cottage in Muskoka to spend some time with his kids and grandchildren. Last year, his big maintenance project was to get rid of the old outhouse on the property. Everything went well until, later that evening in the dark, his grandson fell into the hole before it could be filled in. It was a crappy experience for sure.
This weekend, Walter is going to unveil a plan to transfer the cottage to his kids this summer. Walter is a widower, he’s 78 years old, and wants to see the kids enjoy ownership of the cottage now. We talked about a few things he should keep in mind as he plans to give the kids the cottage. Here’s the gist of the conversation we had.