Sunday’s= Personal Tax
The word cottage assumes there is another property owned by the family. Each family in Canada has one principal residence deduction which applies to the family home and means that its sale is not taxable.
When you sell the family cottage you will pay income tax on the difference between what you paid for the cottage and what you sell it for.
It can be a surprise to Canadians that they have to calculate a capital gain on their cottage. Sometimes people do not have good documentation about how much they paid for the cottage and the improvements that they have made over the years of ownership.
You only have to pay income tax on the difference between your cost and your proceeds so it is important to keep receipts for all the money you spend on the cottage.
Sometimes people tell me that they are never going to sell the cottage. I get to make the smart-ass remark that they may not choose to sell the cottage but they are going to die. When they die their estate will have to pay income tax on the gain on the cottage over their lifetime. Remember that joke about how nothing is certain but death and taxes — this is both — taxes calculated on death.
If you have a cottage you should figure out how much of a gain you have on the sale of the cottage and plan accordingly.