Tax vacation
How to hand down the cottage without tax troubles.
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The Globe’s tax-pert Tim Cestnick has some very useful advice on how to hand the family cottage down to the kids without incurring undue attention from Canada Revenue.
The most obvious solution is to give it away, either now or after your death, but that will create tax issues. You can use your principal residence exemption to protect any capital gain, but then you forego the ability to use that on your city home.
So Cestnick has another, more interesting idea: transfer the cottage to a non-profit corporation. The kids can pay maintenance fees, and there’s no tax to pay on the sale of the cottage to the non-profit.
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