Canadian Cottage Owners Rush to Sell Before New Capital Gains Tax Takes Effect

Cottage owners rush to sell before 2024 capital gains tax hike, causing market disruption and forcing families to weigh options to retain cherished properties.

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Sakchi Khandelwal
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Canadian Cottage Owners Rush to Sell Before New Capital Gains Tax Takes Effect

Canadian Cottage Owners Rush to Sell Before New Capital Gains Tax Takes Effect

Cottage owners across Canada are hurrying to sell their properties before June 25, 2024, when new capital gains tax changes are set to take effect. The impending tax hike has caused disruption in the real estate market, with realtors reporting a surge in listings as owners attempt to avoid the increased tax burden.

Under the new rules, the taxable gain on the sale of a cottage will rise significantly. For example, on a cottage purchased for $250,000 and sold for $750,000, the taxable gain will increase from $250,000 to $291,750. This change could cost families who have owned cottages for decades hundreds of thousands of dollars in additional taxes.

Realtors are experiencing a flood of clients looking to expedite the selling process before the tax changes come into effect. "It is nearly impossible for individuals to list a property and close the sale before the tax changes," said one realtor. Some sellers are even lowering their asking prices in a bid to close a sale quickly, while buyers are using the rush as a negotiating tool.

Why this matters: The proposed capital gains tax changes have far-reaching implications for Canadian families who own cottages or second properties. The increased tax burden could force many to sell cherished family properties, potentially impacting the real estate market and local economies in cottage country regions.

Financial experts advise cottage owners to remain calm and seek the guidance of realtors and tax professionals to navigate the changes. While the rush to sell is understandable, there may be alternative strategies, such as transferring the property or minimizing the tax liability, that could help families retain their cottages. As the June 25, 2024 deadline approaches, the Canadian real estate market is preparing for a potential disruption as cottage owners weigh their options in the face of the new capital gains tax rules.

Key Takeaways

  • Cottage owners rushing to sell before 2024 tax changes take effect
  • Taxable gains on cottage sales to rise significantly under new rules
  • Realtors report surge in listings as owners try to avoid higher taxes
  • Tax changes could force many to sell cherished family properties
  • Experts advise seeking guidance to navigate changes and retain cottages