Ontario Cottage Listings To Rise Before Capital Gains Tax Change

Recent changes to Canada’s capital gains tax have sparked significant concern among cottage owners, particularly those with properties in popular areas like Muskoka. The federal government’s decision to increase the inclusion rate for capital gains from 50% to 66% is poised to impact the real estate market profoundly, especially for cottages and recreational properties. This tax increase might not just affect wealthy cottage owners but could also impact middle-class families who own recreational properties. 

Owners Forced to Sell

Many Canadian cottage owners are upset about the capital gains tax hike, fearing it will create financial burdens and potentially force them to sell their properties. This concern is particularly acute for multigenerational cottages that families have owned and cherished for years. The increased tax rate means that a larger portion of the profit from selling a cottage will be subject to taxation, which could lead to substantial tax bills for sellers. The federal government expects the higher inclusion rate to generate significant revenue, estimated at $19.4 billion over the next five years. While this move aims to increase federal funds, it has faced criticism for potentially disadvantaging property owners who rely on their cottages for seasonal income or as a family legacy.

Real estate experts predict that the tax change could lead to a surge in cottage listings as owners rush to sell before the new rate takes effect. They also believe the market will experience a significant correction due to the future influx of properties. The increased supply could drive down prices, making it more challenging for sellers to achieve a fair return on their properties.

As the new capital gains tax rate approaches implementation, cottage owners and potential buyers should closely monitor market trends and consider the financial implications of holding or selling recreational properties. The anticipated flood of listings in regions like Muskoka might offer opportunities for buyers but could present challenges for current owners looking to maximize their investments.


Looking to buy or sell your home? Please do not hesitate to contact me at 647.930.1888 or email info@timsold.com for all things real estate.

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