New Canadian Capital Gains Tax Rate Negatively Impacts Middle Class Families That Own Cottages


New Canadian Capital Gains Tax Rate negatively impacts middle-class families that own cottages

FOCA represents 250,000 families that live at the waterfront across Ontario, either seasonally or year-round.

The new Canadian capital gains tax rate announced by the federal government on April 16th raises significant concerns for many Canadians who have dedicated their lives to maintaining family properties.

In particular, FOCA is concerned because this tax will negatively impact 150,000 seasonal cottage owners in Ontario alone, when it comes time for them to transfer the cottage to the next generation. “It is important to recognize that these individuals are not the wealthiest 0.13% of Canadians as described by the government last week,” said FOCA’s CEO, Lesley Lavender, “but rather middle-class families who have cherished these properties as part of their heritage and family legacy, in many cases for multiple generations and over several decades.”

A couple who inherited their waterfront property from parents in the early 1980s when the average cost of a home was around $75,000, could have a property with a fair market value today of over $1,000,000 – according to Royal LePage’s 2024 Spring Recreational Property Report. That would represent a $925,000 capital gain upon disposition of the cottage in a sale or even by gifting the cottage to the kids, of which $425,000 would be taxed at the new higher rate (the amount above the $250,000 threshold for each person).

“This tax change will have a devastating effect on families’ ability to keep the next generation in the cottage, which could have a profound cultural impact on our heritage and way of life as Canadians,” said Lavender. “It’s crucial that any tax measures consider the unique circumstances of cottage owners and preserve their ability to maintain these treasured properties within their families.” Otherwise, this tax could result in the premature sale of tens of thousands of Ontario cottage properties which would open the door to speculators, the proliferation of absentee landlords, and more short-term rentals in rural waterfront communities.

Rather, FOCA hopes the government will amend the application of this new tax to mitigate its impact on middle-class families, and ensure the traditional stewards of these cottage properties can continue to enjoy the waterfront for generations to come.


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