Q: Since 1974, my wife and I owned a cottage close to Peterborough. We are Toronto residents for more than 40 years after moving from Montreal. We seldom use the cottage but my kids and grandchildren enjoy its use all summer. If we sell the cottage, will we be subject to tax? If we are, can I gift the property to the kids to avoid the taxes?
– Gerry and Lorraine
A: Prior to December 31, 1981 it may have been possible to claim a capital gain exemption on the cottage. However, after 1981 an exemption can only be claimed on one principal residence per family unit. Family members include spouses, common law partners and children under 18 years of age. Therefore, any sale or transfer of ownership would be subject to capital gains, including gifting.
Individuals should check with their financial advisor/accountant for special capital gains exemption election filed on their behalf with CRA. With the escalating prices in stock market and real estate, including cottage property, timely and proper tax planning is a necessity.
– Henry Choo Chong, CGA provides professional accounting and taxation solutions for individuals, businesses and corporations. He can be reached at: 416-590-1728 Ext.304. E-mail all questions to Money Matters: choochonghcga@yahoo.ca
