This blog is the last in my family cottage series. I think it is fitting that the series is wrapping up just as many of us our closing up our family cottages for another year.
You probably noticed a common theme among the various options I’ve discussed over the last five blogs: capital gains tax. Whatever you choose to do with your family cottage, for tax purposes the outcome remains the same — capital gains tax will usually be owing unless the cottage has gone down in value or it is the only residence you own. Advance planning can help you and yours anticipate and plan for the tax burden.
Regardless of what option you are considering, consult professionals early in the process:
- a tax accountant as the taxation issues can be complicated and you need proper advice regarding capital gains tax;
- a financial planner who may be able to offer suggestions for ensuring there are funds to cover the capital gains liability; and,
- a lawyer specialized in estate planning who can draft the necessary documents to ensure your desired goals are achieved.
Carefully consider the various options before deciding what is best for you and your family. Openly discuss your ideas with your children and ensure everyone is on the same page. Do what you can so that all your cottage memories and the cottage memories of your family’s future generations can be happy ones.
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