Inheriting a property as a result of a loved-one\u2019s death is\nvery emotional and exhausting. The situation requires understanding on how it\nworks legally and what the process is. On top of dealing with the loss and\ngrieving, if you do inherit the family cottage, or you currently own one and\nare thinking about passing it down, there are several fine points to know\nconcerning our Canadian laws. Let\u2019s check out a few here: <\/p>\n\n\n\n
Do I have to pay a\nfee? <\/strong><\/p>\n\n\n\n Unfortunately, the truth is yes. In Canada, second homes,\ncottages and any other vacation property are all taxable assets. In Ontario,\npassing down a vacation property to a beneficiary will mean probate fees\n(a.k.a. Estate Administration Tax) which are roughly 1.5% of the value of the\nproperty. So, if the property is now valued at $1 million, then the probate\nfee\/tax would be $15,000. So the beneficiary who receives this property will encounter\na significant financial hit. <\/p>\n\n\n\n Capital Gains tax\u2026what\nis that?<\/strong><\/p>\n\n\n\n Almost always, vacation properties increase in value over\ntime. When this happens the owners have to contend with what\u2019s known as a Canadian\nCapital Gains Tax. If the transfer of property over to you the beneficiary, is\ntoo great a cost and you can\u2019t afford, then you can always decide to sell. However,\nwhen you sell, the profit you make is known as Capital Gain. You would pay tax\non that amount. Let\u2019s say your parents bought the cottage for say $60,000 back\nin 1974, and it\u2019s now been appraised at $200,000, your capital gain would be\nthe difference of $180,000. You get taxed on that amount, which would be 50% of\nthis gain at your marginal tax rate. <\/p>\n\n\n\n Suggestions on what\nto do first?<\/strong><\/p>\n\n\n\n The best thing to do first, aside from speaking with a real\nestate lawyer, is to get an appraisal done on the property and locate any of\nthe original records. The appraisal will give you an accurate idea of the properties worth now. Once you understand\nthe fees and taxes involved with the property, you can then figure out if you\nwant to keep the cottage or if you need to sell it.<\/p>\n\n\n\n There are a number of things to think about when considering\npassing along ownership of the family cottage. You should decide on if it will be\nused by the entire family? Will the upkeep and maintenance be divided up equally\nbetween the beneficiaries? Can the regular maintenance like the dock, the\nseptic system, road access and other fees, be affordable for the person you\u2019re\nleaving it to? Without proper planning, a beneficiary who receives a family\ncottage may not have the means to maintain it therefore inviting a host of\nproblems for them to deal with\u2026on top of everything else.<\/p>\n\n\n\n If you are contemplating passing down your family vacation\nhome, or if you know you are going to inherit one in the future, connect with us,\nAres Law in Parry Sound. You can rest assured that as experienced real estate lawyers,\nwe know a thing or two about buying and selling cottages, as well as succession\nplanning and wills. It\u2019s our job to make sure that nothing is missed and that\nyour interests are always protected. Contact us to learn more about the\nservices we offer and how we can help; call us today at (705) 746-6444.<\/p>\n","protected":false},"excerpt":{"rendered":" Inheriting a property as a result of a loved-one\u2019s death is very emotional and exhausting. The situation requires understanding on how it works legally and what the process is. On top of dealing with the loss and grieving, if you do inherit the family cottage,…<\/p>\n","protected":false},"author":1,"featured_media":1415,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"nf_dc_page":"","footnotes":""},"categories":[1],"tags":[116,124,122,123,58,125],"class_list":["post-1412","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized","tag-ares-law","tag-capital-gains-tax","tag-inheriting-property","tag-property-inheritance","tag-real-estate-law","tag-vacation-property"],"yoast_head":"\n