Limiting the tax bite on the family cottage
A few weeks ago, we featured a general article about how to engineer a tax-cost-effective transfer of the family cottage to the next generation.
Some readers were curious as to how much it might cost to use life insurance -- either to pay the capital gains tax required down the road or to provide some liquidity to adult children who would never use the cottage.
For most people, passing on a vacation property comes down to one of two options: Deferring taxes owing until the death of a surviving spouse or transferring ownership to the children now and pay any taxes owing up front.
Here's a more detailed look at the various options including joint, last-to-die insurance coverage (often paid by those lucky kids) -- with the caveat that professional advice is a must when going this route.
By Gordon Powers, MSN Money
Posted by: Murdock Morrison | Aug 31, 2009 9:09:41 PM
My wife and I have a beautiful cottage in Cavendish, PEI and have the dilemna of deciding how to deal with the capital gains tax. I am interested in the most cost efficient way to do this as we have 3 children( 2 boys and a girl) and have made up our mind and in our will that the cottage will go to our daughter as she is the most interested and will look after it much better than the boys. But how do I do this without incurring a big tax bill. Your advice will be appreciated as it could be via insurance, have them buy it from us or leave it to her after we pass on. Thanks- murdock and connie morrison