Did you know that the changes to the capital gains inclusion rate could significantly impact the amount of taxes your family will need to pay when passing on your recreational property, such as a family cottage, to future generations?
Below is an example of a cottage purchased for $200,000 and now valued at $1,000,000. The new capital gains inclusion rate would increase the tax payable by 23% or almost $50,000.
| Before June 25, 2024 | After June 24, 2024 | |
| Capital Gain (CG) | $800,000 | $800,000 |
| at the 50% inclusion rate | $800,000 | $250,000 |
| at the 66.67% inclusion rate | – | $550,000 |
| Tasable CG amount | $400,000 | $491,685 |
| Tax Payable* | $214,120 | $263,198 |
*Based on Ontario top marginal tax rate 53.53%
E&OE
The good news is that with effective financial planning, you can proactively manage and reduce the impact of these changes, ensuring that your family’s legacy remains intact and protected for years to come. We can help you explore the benefits of different solutions to minimize the tax burden on your loved ones and allow you to pass on your cherished family cottage to the next generation. Don’t let these changes catch you off guard. Schedule a meeting today to discuss how we can help you navigate the capital gains tax change and preserve your family’s legacy.
