Estate sale boom of vacation properties?

by John Tenpenny21 Oct 2015
Analysts anticipate a growing opportunity for real estate agents to pick up valuable vacation listings in the coming years.

A recent CIBC poll found that 70 per cent of those Canadians expecting to leave assets plan to pass down real estate upon their death. Many of these are second or vacation homes, which due to a big jump in their value over the years come with big tax bills when owners pass away.

Many Canadians expect to leave vacation property in their wills but the rapid rise in real estate values could leave them or their heirs with a major tax bill, said Jamie Golombek, Managing Director, Tax and Estate Planning, Wealth Advisory Services at CIBC in a press release.

“If you plan to sell or pass down real estate to the next generation you may be subject to a host of tax and estate planning issues that could not only cost you or your heirs a lot of cash, but could even force the sale of the property,” warned Golombek.

The key to deciding how best to transfer your property is to understand how the gains from the disposal are taxed: A principal residence will not trigger capital gains and home owners are free to decide which property they designate as their principal residence, according to Golombek.

“[Property owners] should make a conscious decision whether or not to claim the PRE when they dispose of a property,” cautioned Golombek. “Considering the past appreciation in value and the potential for future increases, it may make sense to save the PRE for the property with the most gains.”

COMMENTS

  • by LD 10/21/2015 12:29:23 PM

    I think you should review the PRE. You can only use the years that you used a property as a principal residence. Look at the Interpretation Bulletin for capital gains and principal residence with Rev. Can.

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