Keeping your lakeside view.
My husband's family has owned a cottage in the Muskokas since 1928. Four generations of the family (counting our children) have enjoyed swims in the lake, lazy days on the dock with a good book, hikes in the woods, campfires and countless memories. As my mother- in-law gets ready to celebrate her 80th birthday this summer, she has begun the discussion of how to make sure this treasure stays in our family for another generation. It's a talk every family with property that is tied to so much emotion needs to have.
A recent series of articles in the Globe and Mail, written by tax columnist Tim Cestnick, have shed light on the importance of having this talk. The articles entitled "Passing along the keys to the coveted family cottage" (May 13, 2010, p B17) and "Selling the keys to the family cottage" (May 24, 2010, p B5), outline 3 options for dealing with the cottage: give it away, sell it to family or sell it outside the family. Each option has its advantages and disadvantages.
If passing the cottage on to a family member, you might want to check out " Handing down the family cottage", which quotes lawyer Peter Lillico, who outlines six steps to ensure a seamless cottage succession:
- Estimate the capital gains tax due upon transfer.
- Take action to reduce the tax bite.
- Fund the capital gains tax liability.
- Select your preferred plan.
- Prepare agreements to avoid adversity.
- Level the financial playing field.
For me – I'm hoping for many more days lounging on the dock with a good book looking out at my view of the lake.
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