Some Canadian cottage owners upset after Ottawa increases capital gains tax
CTV
The federal government says new capital gains tax changes will only affect the rich, but some realtors say they are hearing from 'middle-class' cottage owners who worry they may have to sell before the rules come into effect on June 25.
The federal government says new capital gains tax changes will only affect the rich, but some realtors say they are hearing from “middle-class” cottage owners who worry they may have to sell before the rules come into effect on June 25.
“Most of the calls that I’m getting are from people who want to hand their cottages down, rather than sell them, and they are pretty upset right now. The properties have been in their families for years,” John Fincham, a broker with Re/Max Parry Sound Muskoka Reality, told CTV News Toronto.
After cottage prices reached record highs during the pandemic, they've cooled down with rising interest rates. Now, with the tax changes, Fincham expects prices will now drop even further.
When new capital gains rules come into affect on June 25, Fincham said some owners are concerned about the additional amount they will have to pay to the government when they sell their properties.
If a cottage was purchased for $250,000 and later sold for $750,000, under current tax rules that would be a capital gain of $500,000. At 50 per cent, the taxable capital gain would be $250,000.
However, on and after June 25, 2024 that same cottage purchased for $250,000 selling for $750,000 would have the first $250,000 of the capital gain taxed at 50 per cent totalling $125,000. Plus an additional $250,000 taxed at 66.7% equalling $166,750.
The taxable gain on that same cottage would rise from $250,000 to $291,750.
