Family cottages and the impact the capital gains tax changes could have

With the increase in the capital gains inclusion rate moving forward, Canadians with family cottages are facing a larger tax bill when they pass them on to family or sell for retirement.

Real estate experts say it’s not just the wealthy being caught in the crossfire.

“I know the federal government has been vocal about this is only targeting the wealthiest of the wealthy; it’s just not in practicality, it’s just not true,” says Christopher Alexander, president of Re/Max Canada.

“I think that it’s going to penalize more average Canadians than were intended.”

The House of Commons voted Tuesday to approve the Liberal government’s capital gains tax changes. The Conservatives opposed the measure.

Capital gains are the proceeds from the sale of an asset like a stock or an investment property. Currently, all capital gains come with an inclusion rate of 50 per cent, meaning half of the profits realized from the sale are added to taxable income in that year.

Under the Liberals’ proposed changes, that inclusion rate would rise to 67 per cent on any gains realized above $250,000 annually for individuals.

They say this measure targets the wealthy and will be invested in health care, housing, and clean technology and will improve “tax fairness” in Canada, but not everyone agrees, saying it’s penalizing more of those in the middle class and people looking to retire.

Bob Clarke, owner of Clarke Muskoka Realty and Construction, says since it was announced they have been incredibly busy with people trying to finalize the sale of their cottages before the change comes into effect at the end of this month.

“We’re running out of time. In fact, we’ve sold I don’t know how many properties now, in this legislation and people aren’t saying, ‘Let’s close