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Selling a cottage to a family member: What that means for capital gains

– moneysense.ca

AskMoneySense
I shared a cottage property with my brother. I sold my half to my half to my niece. Do I have to pay capital gains tax? If so, how do you calculate this? How do you determine the adjusted cost base? What expenses can be applied?

—Terry

What happens when you sell your cottage to a family member

The family cottage can provide a lot of lasting memories. But when it comes to sharing it with family members, money matters can become an issue. In some cases, it’s about figuring out the repairs to do next summer and who is going to flip the bill. In most cases, taxes eventually become a consideration as well.

In your case, Terry, it sounds like the sale of your half of the family cottage to your niece has already occurred. So, the key is figuring out what tax implications will result.

Can a family cottage be exempt from capital gains?

It depends. A capital gain occurs when you sell certain assets for a higher price than what you paid for them. Capital gains tax became payable in Canada in 1972…

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