More Cottage Life Tax Tips And Traps

Tax impacts of renting your cottage, selling U.S. property

Thinking about putting that cottage up for sale? Plenty of people are thinking of cashing in, given the high demand – and commensurately higher prices – for out-of-town properties during the pandemic. But that sale could come with a host of unwanted side effects. No, not mosquitoes, but taxes. Last time I outlined the tax effects of a cottage sale and the ins and outs of transferring a property to a family member. This time, we'll look at the implications of renting out your piece of paradise, and what to do with a property south of the border.

Renting out your second home

If your cottage is not your principal residence, the proceeds of any sale could be subject to capital gains tax. If so, you may want to consider a scenario where your second home doubles as a rental property. And from my desperate searches on VRBO and AirBNB, renting your cottage over the summer can also net you quite a windfall these