Will Canadian cottage owners list their vacation homes in the coming months? This remains to be seen, with the federal government poised to raise the capital gains tax this summer.

Prime Minister Justin Trudeau and his Liberal government announced in the 2024 budget that Ottawa will implement higher taxes on capital gains on annual amounts in excess of $250,000. The tax hike, which boosts the inclusion rate from 50 per cent to 66.7 per cent, would be applied to gains realized after June 25.

Some industry observers say this could significantly affect cottage owners, as they have witnessed rocketing home values over the last four years. A chorus of market watchers note that it would make sense to consider your options before the deadline, because the savings (or cost) could total tens of thousands of dollars.

Under the current tax structure, if a cottage is bought for $250,000 and sold years later for $750,000 – $500,000 profit – sellers would face a capital gains tax of $250,000. Starting on June 25, the $500,000 profit would be taxed 50 per cent for the first $250,000 and an extra 66.7 per cent for every dollar above $250,000.

The Federation of Ontario Cottages’ Association (FOCA) estimates this could negatively affect approximately 150,000 seasonal cottage owners in the province “when it comes time for them to transfer the cottage to the next generation.”

“Contrary to the government’s characterization, these individuals are not among the wealthiest 0.13 per cent of Canadians, but rather hard-working middle-class families who have cherished these properties as part of their heritage and family legacy for generations,” said Lesley Lavender, the CEO of FOCA, in a letter to Prime Minister Trudeau and Finance Minister Chrystia Freeland.

She added that the 60-day notice is “insufficient” for a sizeable change as it “could have a dramatic impact on the financial position of middle-class Canadian families.”

Homeowners in Ontario’s cottage country are taking notice, says John Fincham, a realtor at RE/MAX Parry Sound Muskoka Realty.

“I’ve had calls, so far just clients trying to get clarification, but there’s going to be people that have decided that the capital gains tax adjustment is the last straw and it’s time to get into the market to sell,” he told the Financial Post. “Why wouldn’t … those with secondary properties like cottages strive to sell in the coming months?”

Ultimately, housing market professionals are urging families to seek professional assistance for financial and tax help.

However, while Canadian officials say this would impact a small number of individuals, new data suggest it would affect a sizeable part of the country’s population.

Cottage Ownership in 2024

According to a recent Leger survey commissioned by RE/MAX, 13 per cent of Canadians own a recreational home. This includes six per cent who purchased before 2020, three per cent who bought after 2020, and three per cent who inherited a cottage. Additionally, eight per cent of Canadians plan to buy a recreational home.

Heading into budget season, many Canadian cottage owners had already sold one of their properties amid the elevated cost of living and rising interest rates. The survey revealed that more than a quarter (28 per cent) had sold their cottages.

Of those who still own their cottages, nearly half (45 per cent) say they can no longer afford to keep or maintain them and are thinking about selling these cottages. Meanwhile, 29 per cent plan to sell their recreational homes in the next year due to new regulations, affordability issues, and inflation pressures.

For those who are on the outside looking in, close to half (46 per cent) note that an affordable purchase price is their top consideration for buying a cottage, up from 43 per cent in 2023. This is followed by proximity to water (35 per cent), access to seasonal amenities (27 per cent), and all-season access to emergency services (27 per cent).

A Setback for Potential Cottage Sellers?

Fincham added in an interview with the newspaper that a key challenge for prospective cottage sellers is that the Ontario cottage market is already experiencing ample supply. “We’re looking at well over 700 cottages currently on the market. That’s a significant number,” he said. “The supply far outweighs the demand, which is already quite weak.”

Should there be a flood of fresh supply, cottage prices would decline across the Ontario real estate market. Home prices in popular Ontario cottage locations have already eased over the past year.

According to the Lakelands Association of REALTORS®, which represents jurisdictions in the heart of Canada’s cottage country, the composite benchmark price was $679,400 in March 2024, down 1.1 per cent from the same time a year ago. Bonnie Looby, the association head, noted that there has been a rebound in new listings.

If you are considering buying a cottage, this could be an opportunity to get your foot in the door and start enjoying nature with your family. Contact a RE/MAX agent today.

The post Capital Gains Tax Hike Spooks Canadian Cottage Owners appeared first on RE/MAX Canada.

5 Great Cottages for Sale in Ontario

Envision a place where time slows and where laughter echoes through the air. Imagine teaching your children to fish by the lake, roasting marshmallows over a crackling fire, or exploring the changing seasons in your very own backyard. Having a cottage isn’t merely owning a piece of property but a haven for creating precious moments with your family.

According to the RE/MAX 2024 Cottage Trends Report, 36 per cent of Canadians are drawn to the quality of life a cottage affords compared to urban/larger city centres. Cottage ownership in Ontario offers a compelling financial advantage that extends beyond the charm of rural living. While prices in major cities continue to escalate, the countryside presents an affordable gateway to owning property without sacrificing space.

Think about the potential for rental income if you choose to lease the property during periods of non-use or the future resale value in an appreciating market. The RE/MAX report revealed that 41 per cent of Canadian recreational property owners are investment buyers, renting it out for additional income. From this perspective, buying a cottage in Ontario becomes more than just an affordable property purchase – it’s a savvy investment for personal enjoyment and a future financial upside.

From cozy cabins to luxury vacation homes, here are a few great cottages for sale in Ontario. These properties are sure to sell fast or may even be sold by the time you read this. However, if you miss out, your RE/MAX agent will have the inside scoop on other cottages available for sale in the area you enjoy.

Muskoka Lakes

Muskoka Lakes, ON, P0B 1M0
Price: $789,000
MLS® #: X8307258

This enchanting three-bedroom cottage, newly renovated for an open-concept feel, features a sun-soaked Muskoka family room that doubles as a guest space. Relish over 200 feet of waterfront from your large deck or private dock, with a sandy shoreline perfect for swimming and boating. Plus, a cozy separate bunkie awaits your extended family visits. Seize this Airbnb favourite for potential income, complete with all indoor and outdoor furniture. Don’t miss the opportunity to own this slice of Ontario paradise. Experience luxury lakeside living today!

View listing Peterborough

Otonabee South Monaghan, ON, K9J 6X7
Price: $1,450,000
MLS® #: X8319676

Discover your waterfront dream at 25 Hawkins Rd, a stunning custom home nestled on the Otonabee River, just 10 minutes from Peterborough. This gem offers 105 feet of pristine waterfront, set within lush perennial gardens ensuring privacy and serenity. Featuring four spacious bedrooms, three baths, and an open-concept main floor ideal for hosting, with breathtaking river views from every turn. Cathedral ceilings and a majestic fireplace adorn the living area, while the primary suite impresses with a sitting area, walk-in closet, and ensuite boasting a stone soaker tub with panoramic views. Enjoy a modern kitchen, main floor laundry, and a vast rec room with deck access. Two workshops cater to the hobbyist, all within reach of endless boating on the Trent. Experience luxury and nature in harmony!

View listing Collingwood

Collingwood, ON, L9Y 3Z1
Price: $2,398,000
Courtesy of Loretta McInnis, RE/MAX Four Seasons Realty Limited
MLS® #: 40576977

Discover this breathtaking private beachfront paradise with unmatched panoramic views of Georgian Bay. Featuring 3647 sq. ft. of luxury living, this stunning home offers four bedrooms, five bathrooms, and enchanting sunrise and sunset vistas. Highlights include a Muskoka room with 180-degree water views, two wood-burning fireplaces, and an open-concept kitchen perfect for entertaining. Relish in a personal gym with a sauna, beautiful landscaping, and your own serene beach. Minutes from historic Collingwood, enjoy boutique shopping, exquisite dining, and endless outdoor activities. Your oasis of tranquillity and adventure just 70 minutes from Toronto International Airport awaits.

View listing Tobermory

North Bruce Peninsula, ON, N0H 1Z0
Price: $794,000
Courtesy of Ashley Jackson, RE/MAX Grey Bruce Realty Inc
MLS® #: 40547280

This exquisite 3-bedroom, 1-bath retreat offers 1,823 sqft of living space nestled within a serene community. Savour stunning sunrises and scenic views from your covered deck or private bedroom balcony. With over 110 ft of clean, rocky shoreline, opportunities for swimming, kayaking, and canoeing are at your doorstep. Featuring two cozy propane fireplaces, a spacious family room with large windows, and a kitchen perfect for entertaining, this home combines comfort with charm. Enjoy easy access to the Bruce Trail, low-maintenance living, and a home furnished for immediate enjoyment. Discover your dream of lakeside living today!

View listing Lowbanks

Lowbanks, ON, N0A 1K0
Price: $549,900
Courtesy of Alaa Yousif, RE/MAX Realty Specialists Inc
MLS® #: 40553894

This captivating four-bedroom, one-bathroom treasure offers breathtaking views of Mohawk Point Lighthouse on Lake Erie. Spanning 778 sq. ft., this year-round oasis is a haven for relaxation and entertainment, comfortably sleeping 10+. Imagine savouring your mornings in the sun-filled living and dining area, unwinding on the wrap-around sun porch, and ending your days beside the cozy firepit under mature trees. Boasting a main floor bedroom and bath for convenience, plus an L-shaped entertainment area and three additional bedrooms downstairs. Perfectly located minutes from the Marina, dining options, Grand River, and Port Colborne, with easy access to the US Border. Seize this rare opportunity to own a slice of paradise with incredible rental potential.

View listing

Are you tired of the hustle and bustle of city living? Do you dream of spending your days surrounded by nature, the sound of birds chirping, and the calming effect of the water? If yes, then the cottage life may be calling your name.

A RE/MAX agent can help you find a cottage that fits your budget and preferences, with knowledge of all the ins and outs of the market and access to properties that may not be listed on any public platform.

So, what are you waiting for? Call your local RE/MAX agent today and let them help you find the cottage of your dreams. Trust us; nothing beats the peace of mind and tranquility that comes with the cottage life.

Take the first step toward living the life you’ve always imagined.

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