Skip to main content

Some Canadian cottage owners upset after Ottawa increases capital gains tax


The federal government says new capital gains tax changes will only affect the rich, but some realtors say they are hearing from “middle-class” cottage owners who worry they may have to sell before the rules come into effect on June 25.

“Most of the calls that I’m getting are from people who want to hand their cottages down, rather than sell them, and they are pretty upset right now. The properties have been in their families for years,” John Fincham, a broker with Re/Max Parry Sound Muskoka Reality, told CTV News Toronto.

After cottage prices reached record highs during the pandemic, they've cooled down with rising interest rates. Now, with the tax changes, Fincham expects prices will now drop even further.

When new capital gains rules come into effect on June 25, Fincham said some owners are concerned about the additional amount they will have to pay to the government when they sell their properties.

If a cottage was purchased for $250,000 and later sold for $750,000, under current tax rules that would be a capital gain of $500,000. At 50 per cent, the taxable capital gain would be $250,000.

However, on and after June 25, 2024 that same cottage purchased for $250,000 selling for $750,000 would be subject to a tax on 50 per cent for the first $250,000 of the capital gain and an additional tax on 66.7 per cent of every dollar above $250,000.

The taxable gain on that same cottage would rise from $250,000 to $291,750.

How much you would actually pay on these gains would depend on your marginal tax rate.

Some families have had cottages in their family for 50 years or longer so the capital gains taxes they could have to pay could be hundreds of thousands of dollars.

“It doesn't really matter if you plan to hand them down or you want to sell them, it's going to cost them a lot of money either way and they (some cottage owners) are not necessarily rich folk” said Fincham.

Evelyn Jacks, the president of the Knowledge Bureau and author of 55 tax books said “this is a major tax increase and it's going to affect a lot of people."

Jacks said while some cottage owners may consider trying to sell their properties to avoid paying additional capital gains before June 25th, she said families should not rush to make such a big decision.

"Rather I would say to err on the side of proper planning, getting the family together and making sure the cottage passes to the right people in the family. These are all important considerations,” said Jacks.

One silver lining could be if you're thinking of buying a cottage, Fincham feels prices could drop by an additional five or ten per cent.

"I expect an uptick in listings in the next month and a half and it will probably lead to price erosion, because there are already a lot of listings currently,” said Fincham.

Jacks recommends families with cottages get professional help with financial and tax advice before making any decisions as there may be ways to transfer a property or reduce the amount of tax you have to pay. Top Stories


opinion Why 'paying yourself first' is the key to a comfortable retirement

One of the most effective retirement savings strategies is to pay yourself first. In his personal finance column for, Christopher Liew outlines strategies for consistently saving and investing over time and building a solid nest egg.

Stay Connected