With the increase in the capital gains inclusion rate moving forward, those with family cottages are facing a larger tax bill when they pass it on to family or sell for retirement.
With the increase in the capital gains inclusion rate moving forward, Canadians with family cottages are facing a larger tax bill when they pass them on to family or sell for retirement.“I know the federal government has been vocal about this is only targeting the wealthiest of the wealthy; it’s just not in practicality, it’s just not true,” says Christopher Alexander, president of Re/Max Canada .Capital gains are the proceeds from the sale of an asset like a stock or an investment property.
“What it’s done is it’s pushed people to make a decision and to put their cottages up and secondary homes on the market because they are going to be impacted by the capital gain,” he says.Clarke and Alexander say more time should have been given for people to get their plans in order or cancelled altogether.
What this means for family cottages is that when the owner of the cottage dies or passes it on to family, high amount of the increased value is subject to capital gains tax before the property can be passed on, which can be a hefty increase for homes passed through families for generations.“The people that were planning on selling this year after June 25 as part of their retirement strategy or wealth-building strategy, those are the people that are going to suffer first,” Alexander says.
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