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Written by: Lyndon Braun, CPA, CA
Now that we are nearing the middle of summer – many of you will be thinking of days at the beach, on the water and being away from the hustle and bustle of everyday life. Long evenings and summer barbeques define our summer memories and a family vacation home or cabin is the setting for many of these special times. Many families have forged tremendous memories and bonds with time away at a vacation home.
For those of us lucky enough to have a vacation property owned in the US, a retreat in the Gulf Islands, or a cabin in the Cariboo many of these places have a special role in our families. Preserving these family assets and along with it all the memories associated with it needs to be planned for. Too many times we see these special places being turned into family nightmares either because they need to be sold quickly to settle Estate liabilities or because they’ve become a family battleground.
So what’s the big deal? Well as the saying goes, you can’t escape taxes. Most of you will be aware that your principal residence can appreciate in value and be sold without incurring income taxes. However, given the real estate price appreciation in Vancouver and the Fraser Valley, this exemption is needed for the family home. Vacation homes or cabins are, as a result, left subject to taxation when the owners pass away or when these properties are passed onto the next generation. And like anything else in life, a little prudent planning can make the difference between ensuring that these special places can pass to the next generation successfully as opposed to being sold off in order to solve a tax bill.
So what can you do about it? Have a plan. There are issues that need to be planned for:
At Manning Elliott we can assist you in preparing a plan that can help your family navigate these issues. We have experience to help you create a plan that addresses these issues and gets formally implemented as part of your Will or larger Estate plan.
Avoid the pain and conflict that can so often occur when families are forced to move on from a property that holds so many memories. A little planning can go a long way, and the good times can keep rolling on. Enjoy the summer!
The above content is believed to be accurate as of the date of posting. Tax laws are complex and are subject to frequent changes. Professional advice should be sought before implementing any tax planning. Manning Elliott LLP cannot accept any liability for the tax consequences that may result from acting based on the information contained therein.