The family cottage can be among a family’s most cherished institutions. Unfortunately, a cottage does not qualify as a Principle Residence and is therefore subject to capital gains tax on the death of the original owners. Often the cottage has to be sold just to pay the tax owing.
The question then becomes how to reduce or eliminate that tax and keep the property in the family?
One solution is through the use of a family trust because, unlike people, a trust never dies. Then, a little transfer can save taxes even if the cottage has been in the family for years.
Yes, you will still pay tax on the transfer using a trust, but compare this to the capital gains, a tax that will only get worse as the property increases in value. In some cases the entire family has had to chip in just to pay this capital gains tax!
Good planning prevents waste and allows us to prepare for the inevitable. For more information about family trusts, contact Greg Hertzberger.
Hertzberger & Associates
Gregory C. Hertzberger B.A. (Hons), L.L.B.
Certified Specialist in Corporate & Commercial Law (L.S.U.C.)