Article written by Rishma Jessa, CPA, CGA, M. Fisc., TEP, at SEGAL GCSE LLP, in Canadian News Quarterly, a newsletter published by
Canadian member firms
of
Moore North America
. This article on property transfer is part of our mission to become your partner in success by keeping you up to date with the latest developments. If you own a secondary property, this article discusses the tax advantages of transferring a property such as a cottage. The beneficiary of the asset transfer will have an impact on the situation and therefore on the strategy to be adopted.
Can you give away your home during your lifetime?
As parents age, they may consider transferring their assets and inheritance to their children, including the family cottage. Summer vacations at the family cottage are among the most memorable and precious of memories, with deep sentimental value for parents.
Of course, many parents want to keep the cottage in the family for future generations. It’s important to understand the issues surrounding the transition of such an asset to the next generation. This article highlights the issues to consider, including tax implications and options.
Transfer of real estate
Let’s use an example to illustrate the typical issues parents need to consider when making the transition from the family cottage. Marie is 68, and Jean is 65. They are married and have two grown-up children. They own a cottage, purchased 22 years ago, and another property, the family home. Having recently retired, they are evaluating how they can keep the cottage in the family to perpetuate their legacy.
Family conversation
First, Mary and John need to have a conversation with their children to find out what interests them. Would the children like to keep the cottage? Will they be able to afford the maintenance costs? What if only one child shows an interest in the property, but can’t afford it? What happens if both children want to share the cottage? How can Mary and John ensure that use and costs are shared equally among the children? How do you resolve conflicts in different situations?
Mary and John need to have a frank discussion with their children and express their desire to keep the cottage in the family. At the same time, both parents need to listen to their children’s wishes about the cottage. They should also discuss the costs and responsibilities associated with owning a cottage, especially if the parents will not be contributing financially to its upkeep.
If Mary, John and their children all agree that the cottage should remain in the family, there are several options for transferring the cottage to the children, each with its own tax implications and other considerations.
Read the full article on property transfer
and find out about the tax advantages of transferring property.
