Friday, 16 November 2012

Cottage and Capital Gains Tax

Canada Revenue Agency allows for tax free capital appreciation on one principal residence.

This is a particular concern for those that own more than one property such as a home in the city and a second residence or cottage in the country.  When one property is sold it is prudent to make a decision on which residence should be declared as the principal residence.

If the value increase of the cottage has outpaced the home it may be better off for the capital gains tax to be paid on the increase in value of the home and there by protect the increase in value on the cottage from possible future taxation even if there are no plans to sell the cottage in the foreseeable future.

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