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.
CTVNews.ca Top Stories
DEVELOPING Defence rests without Donald Trump taking the witness stand in his New York hush money trial
Donald Trump's lawyers rested their defence Tuesday without the former president taking the witness stand in his New York hush money trial.
Passenger killed, 30 injured as Singapore Airlines flight hits severe turbulence
One passenger was killed and 30 injured after a Singapore Airlines SIAL.SI flight from London hit severe turbulence en route on Tuesday, forcing it to make an emergency landing in Bangkok, officials and the airline said.
Feels like mid-30s in parts of Canada, while other areas expecting snow
Anything is possible this week, as far as Canada's weather is concerned, with forecasts ranging from scorching heat in some parts of the country to rain and snow in others.
Canada's inflation cools to 3-year low of 2.7%, in boost for rate cut bets
Canada's annual inflation rate slowed to a three-year low of 2.7 per cent in April, matching expectations, and core measures continued to ease, data showed on Tuesday, likely boosting chances of a June interest rate cut.
'Documents are fraudulent': Graceland is not for sale, Elvis Presley's granddaughter says in lawsuit
Riley Keough, the granddaughter of Elvis Presley, is fighting plans to publicly auction his Graceland estate in Memphis after a company tried to sell the property based on claims that a loan using the king of rock ’n’ roll's former home as collateral was not repaid.
Trump campaign calls 'The Apprentice' 'blatantly false,' director offers to screen it for him
Donald Trump's reelection campaign called 'The Apprentice,' a film about the former U.S. president in the 1980s, 'pure fiction' and vowed legal action following its premiere at the Cannes Film Festival. But director Ali Abbasi is offering to privately screen the film for Trump.
Nestle to sell $5 pizza, sandwiches in the U.S. for Wegovy, Ozempic users
Nestle NESN.S will market a new, US$5 line of frozen pizzas and protein-enriched pastas in the United States which it says it designed specifically for people taking drugs such as Wegovy or Ozempic for weight loss.
What is BORG drinking, and why is it a dangerous trend? An expert explains
If you've been to a party lately and haven't seen someone drinking a BORG, you're likely not partying with college students.
Independent stores and grocery alternatives see sales boost amid Loblaw boycott
As the month-long boycott of Loblaw-owned stores wears on, small independent food retailers and alternative grocery options say they're seeing a boost in traffic and sales.