Gifting your cottage outright to your children while you are living may be a good option if you no longer wish to own or maintain the cottage and one or more of your children have the financial means to take it over. But before doing anything, get tax advice as an outright gift during your lifetime of capital property can trigger a nasty tax surprise resulting in double taxation.
The transfer would trigger an immediate taxable capital gain assuming the cottage is worth more now than when you bought it. If you owned the cottage in 1994 and claimed the personal capital gains exemption, there may be less capital gains tax owing.
Probate fees on the value of the cottage are avoided at your death since the cottage is no longer owned by you and not part of your estate.
If you want to continue to have the use of the cottage property, consider transferring ownership but retaining a life interest. That way you can have your cake and eat it too! One or more of your children may own the cottage but you get to use it. A life interest also ensures that the cottage can’t be sold without your knowledge. But if your kids would consider doing that, maybe giving up cottage ownership isn’t for you.
Reproduction of this blog is permitted if the author is credited. If you have questions or if you would like more information, please call us at 613 836-9915. This blog is not intended to be legal advice but contains general information. Please consult a lawyer or other professional to determine how the information in this blog might apply to you.
Blog posts pre-dated December 1, 2015 were originally published under Neff Law Office Professional Corporation.
