As the spring starts to ramp up and owners contemplate opening
their cottages for the season, many decide to sell a recreational
property instead of battling the mosquitoes. It may be the result
of a natural progression, as the younger generation may not be
interested or able to maintain the cottage tradition. Or it may be
that owning two houses leaves just too little time for that
all-important R&R. If the decision to sell is made, however, be
aware that there will likely be some major tax consequences.
Fortunately, there are some ways to mitigate these.
Tax consequences of a sale
Basically, there is essentially a
one-principal-residence-per-family rule (with some tax relief still
potentially available for second properties owned prior to 1982).
What this means is that if you sell or transfer the cottage,
capital gains tax may be payable on your "home away from
home."
