As cottage prices fall in Ontario, here’s how to keep it in the family

As you load up the car to head to the lake, there’s no better time to think about your cottage’s legacy – and how, with the right financial planning, you can keep it in the family for generations to come.

While cottage prices have fallen across Ontario, according to the 2023 RE/MAX Cottage Trends Report, the report also found that more than 50 percent of people who own or plan to buy a cottage said the opportunity to pass it on to family was a key motivator for buying.

The biggest mistake people make when succession planning for their home takes too long, says Robert Coruzzi, regional vice president of asset management at Meridian. Have those family conversations early, he says, then review them annually.

Coruzzi emphasizes creating “a budget that comes to life,” a document that can be reviewed and updated monthly depending on circumstances, allowing the family to incorporate those numbers into long-term financial plans.

“You’ll understand what your income and retirement will look like with those expenses,” says Coruzzi. This way your children will know the cost of taking over the cottage, including association fees, maintenance and utilities.

Climate can be a factor in plans, says RE/MAX Canada President Christopher Alexander.

“Weather patterns can be much harsher in cottage areas,” he says, adding that families should expect higher winter heating costs.

Take management costs into account if you rent a house

There are other costs that are unique to a cottage, Alexander says, such as cleaning a septic tank and harbor maintenance. And if long-term plans involve renting, there are various costs associated with that, such as management fees.

Robin Dillane, a mortgage broker with Haliburton Mortgage Services, has noticed an increase in short-term rentals and says it’s important to have the right insurance. And be sure to work with a local insurance company, she adds.

The same goes for mortgage brokers and brokers if you eventually plan to sell.

“I see a lot of customers coming to the area who are used to looking at mortgages in a larger market like the GTA,” says Dillane. in the area.”

It’s crucial to find a lawyer who can help you figure out the best way to transfer a family home, says Alexander.

“There are added values ​​in transferring a house while you are alive,” says Alexander. “Family trusts are an option many people use because it locks in your tax rate on capital gains. I just encourage people to explore them all and choose the one that best suits their needs.”

The bottom line: Don’t wait until the last minute to start planning the future of your family home.

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