MANITOULIN ISLAND鈥擜 澳门三肖三码 real estate agent and a Gore Bay resident are in agreement with the Federation of Ontario Cottagers Association (FOCA) that the new Canadian capital gains tax rate announced by the federal government on April 16 raises significant concerns for many Canadians who have dedicated their lives to maintaining family properties.
FOCA is concerned because it says this tax will negatively impact 150,000 seasonal cottage owners in Ontario alone when it comes time for them to transfer their cottage to the next generation. 鈥淚t is important to recognize that these individuals are not the wealthiest 0.13 percent of Canadians as described by the government last week but rather middle-class families who have cherished these properties as part of their heritage and family legacy, in many cases for multiple generations and over several decades,鈥 said FOCA鈥檚 chief executive officer (CEO) Lesley Lavender.
On April 16, Finance Minister Chrystia Freeland tabled a 2024 federal budget including an announcement that the capital gains tax on amounts over $250,000 will rise on or after June 25, 2024.
Chris Bousquet of Bousquet Realty Brokerage said, 鈥渢his could affect a lot of people. On 澳门三肖三码 Island there are a lot of local people who own cottages and hunt properties. And we are a tourist area so a lot of people own cottages or recreational property.鈥
鈥淩ight now, the capital gains tax is based on 50 percent of gain,鈥 said Mr. Bousquet. If someone sells their secondary dwelling, 鈥渋n the budget for the first $250,000 will be at 50 percent, but if it is over $250,000 this will increase to 66.7 percent.鈥
鈥淲ith this new tax if you sell a cottage, because it is not your principal residence, the capital gains tax goes from 50 percent to over 66 percent if it is sold for over $250,000,鈥 said Joyce Foster of Gore Bay. 鈥淎 lot of people work for minimum wage, and their cottage was to be used for retirement purposes. This increase is not fair.鈥
鈥淧rime Minister Trudeau said this tax will only be penalizing the rich, 0.13 percent of the population,鈥 said Ms. Foster. 鈥淛ust because you own a cottage doesn鈥檛 mean you are rich.鈥
鈥淭here are going to be a lot of people affected by this,鈥 said Ms. Foster.
Mr. Bousquet said property rates have gone up for quite a few years, since before COVID-19 or even just before, there were increases of 50 percent. 鈥淲e have seen in some cases property increases of 400-500 percent.鈥
FOCA provided an example of a couple who inherited their waterfront property from parents in the early 1980s when the average cost of a home was around $75,000 could have a property with a fair market value today of over $1,000,000 (according to Royal LePage鈥檚 2024 Spring Recreational property report). That would represent a $925,000 capital gain upon disposition of the cottage in a sale or even by gifting the cottage to the kids, of which $675,000 would be taxed at the new higher rate (the amount above the $250,000 threshold).
鈥淭his tax change will have a devastating effect on families鈥 ability to keep the next generation in the cottage, which could have a profound cultural impact on our heritage and way of life as Canadians,鈥 said Ms. Lavender. 鈥淚t鈥檚 crucial that any tax measures consider the unique circumstances of cottage owners and preserve their ability to maintain these treasured properties within their families.鈥 Otherwise, this tax could result in the premature sale of tens of thousands of Ontario cottage properties which would open the door to speculators, the proliferation of absentee landlords and more short-term rentals in rural waterfront communities.
鈥淔OCA hopes the government will amend the application of this new tax to mitigate its impact on middle-class families and ensure the traditional stewards of these cottage properties can continue to enjoy the waterfront for generations to come.鈥
In a letter to Prime Minister Justin Trudeau and Finance Minister Chrystia Freeland, Ms. Lavender wrote, 鈥淚 am writing to you on behalf of (FOCA) to express our strong opposition to the recent announcement regarding changes to the Canadian capital gains tax. This change, as outlined in your announcement on April 16, poses a significant threat to the ability of families to maintain their cherished cottages for future generations, which could have profound cultural implications for our Canadian heritage and way of life.鈥
鈥淔OCA is deeply concerned about the impact this tax change will have on the approximately 150,000 seasonal cottage owners in Ontario alone, particularly when it comes time for them to pass the cottage on to their children. Contrary to the government鈥檚 characterization, these individuals are not among the wealthiest 0.13 percent of Canadians, but rather hard-working middle-class families who have cherished these properties as part of their heritage and family legacy for generations.鈥
鈥淪econdly, FOCA is opposed to the implementation date of June 24, 2024, for the new tax rate,鈥 continued Ms. Lavender. 鈥淲e believe that 60 days of notice is insufficient for such a significant change, which could have a dramatic impact on the financial position of middle-class Canadian families.鈥
鈥淚t is imperative that any tax measures consider the unique circumstances of cottage owners and preserve their ability to maintain these treasured properties within their families,鈥 wrote Ms. Lavender. 鈥淔ailure to do so could result in the premature sale of tens of thousands of Ontario cottage properties, leading to the proliferation of speculators, absentee landlords and short-term rentals in rural waterfront communities. This outcome would run counter to the government鈥檚 stated goal of preserving Canadian heritage and way of life.鈥
鈥淔OCA respectfully urges the government to reconsider the application of this new tax and to take steps to mitigate its impact on middle-class families. We believe that by doing so, the government can ensure that the traditional stewards of these cottage properties can continue to enjoy the waterfront for generations to come,鈥 added Ms. Lavender.
