Inheriting Cottage Packs Tax Wallop

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"They might also buy life insurance and give it to children who aren't being left the cottage," [Tannis Dawson] says. "It's a way to be fair to everybody."

"There's definitely a misnomer among people that the principal residence exemption is only for the residence you live in most of the time, and that's not true," he says. "Really, the principal residence exemption can apply to a residence, such as a cottage, where you just ordinarily inhabit during the year."

"They're going to university and renting," [Mike George] says, "and they don't actually have a house of their own, so you could when you eventually roll out that property in their ownership have them use the principal residence exemption."

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Inheriting Cottage Packs Tax Wallop

Careful planning can reduce the financial burden on heirs

Joel Schlesinger

As the old saying goes, there are two things in life you can count on: death and taxes.

The last place you'd like to think about either of those is at the cottage. But even there, they still haunt us in the form of the capital gains tax.

"Obviously, the values of cottages have gone up significantly from the moms and pops that set these places up for $6,000 or $8,000 to wha...

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