Cottage sale tax tips

How to cut the capital gains tax hit

Thinking about selling the cottage, cabin, or lakeside getaway? Plenty of people are, especially those of the Baby Boom generation who are finding that maintaining two properties is increasingly time-consuming, tiresome, and expensive. And if the younger generation is no longer interested in keeping up a family cottage, there seems little alternative left but to sell. If you do decide to put up that “for sale” sign, bear in mind that the Canada Revenue Agency will come calling with a bill for capital gains tax. Depending on how long you’ve owned the cottage, it could be a big one. But there may be ways to soften the blow.

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Cottage tax traps

Getting away from it all with the CRA

Cottages and cabins in the woods or by the lake are an iconic Canadian getaway. Most owners of recreational property happily deal with maintenance issues for the chance of that glorious sunset, water-skiing, or a dip in the lake. What they don’t count on is that silent partner, waiting to take their cut when it comes time to sell or transfer the place to their kids. Here’s what you need to know. READ MORE

Stressed out over mortgages stress test?

Know the rules before you sign on the dotted line

If you’ve been shopping for a mortgage for your new home, you probably have run across something called a “stress test.” It raises the bar on your financial health a lot higher before you can qualify for a mortgage – even if you don’t have to be insured! This has been stressing us out many unprepared borrowers. But by understanding a few of the rules beforehand, you can smooth out the path to buying that home. READ MORE

Fading sunsets: selling a cottage can be a taxing problem

Unless it’s a principal residence, you’ll pay tax on any gain in value

If the likes of Steven Spielberg, Goldie Hawn, Kurt Russell, Tom Hanks, and Bill Murray have been spotted vacationing at summer homes in the exclusive Muskoka lakes region of Ontario, there really must be something to the whole cottaging experience. And judging from recent price trends, demand for prime waterfront properties is as strong as it ever was. Owning a recreational property is almost iconic in Canada. But what do you do if you own a cottage now and want to sell to a willing A-list buyer? Right now, there’s plenty of incentive to cash in. What pitfalls should you watch for? READ MORE

Does an RRSP withdrawal make sense for first-time homebuyers?

 

When to take advantage of the Home Buyer’s Plan

First-time homebuyers who have RRSPs often look to supplement their down payment by taking advantage of the RRSP Home Buyer’s Plan. But frequently, they have only a sketchy idea of how it works and whether it’s even a good idea to take money out of what is really their retirement savings. READ MORE

Insured-mortgage rule changes give homebuyers the creeps

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Why some first-time homebuyers are scared stiff

If you’re looking to buy your first home, you’ve probably heard about the recent changes to mortgage lending rules recently announced by the government. If you’re shopping for an insured mortgage, these changes could affect you significantly. First-time homebuyers who are relying on high-ratio insured mortgages to help finance their purchase have reason to feel the chills. Here’s a look at what’s in store. READ MORE

Cut the tax take on cottage sales

Beware capital gains tax on non-principal residences

With real estate prices going through the roof across the country, you may seriously be considering selling the family cottage to capitalize on the investment your great grandparents made 50 years ago – or that you made 10 years ago. Trouble is, you have an uninvited partner in the sale: the Canada Revenue Agency, waiting to take its cut of the proceeds. Here’s how to reduce the tax take on a cottage sale. READ MORE

Got the first-time home buyer blues?

Learn the basics of financing before plunging in – no math degree required

Young couples shopping for their first home are faced with the bewildering new language of the real estate market – mortgages alone often seem to require a degree in higher mathematics. It’s tempting to give it all up and just let the lenders and lawyers lead the way. Often, though, that’s the shortest route to turning your dream home into a “money pit.” So it’s vitally important for first-time home buyers to learn at least the basics. Here’s a quick guide to the rules of down payments and mortgages. READ MORE

Snowbirds are vulnerable to mortgage fraud

Title insurance can protect you while you’re away

If you typically spend the winter months in the sunny south somewhere, your Canadian home is likely to be unoccupied. That could leave you open to mortgage fraud (even though you might not have had a mortgage on the house for years). Fortunately there’s a simple, cost-effective way to protect yourself against this. It’s called “title insurance,” and here’s a look at how it works. READ MORE

Cut your tax bill when selling that piece of paradise

How cottage improvements can save you a bundle in taxes

Thinking of selling your cottage? If your cottage or recreational property is not your principal residence – and for most people, it’s not – when you sell it, you’ll pay capital gains tax on any appreciation in its value from the time you bought it. So along with all those ongoing maintenance costs, property taxes, and other expenses associated with ownership of a vacation property, you’ll be paying a good chunk of any gain in value to the federal government. But something called the “adjusted cost base” can cut the tax bill. Here’s how. READ MORE

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