Canada is currently in the middle of an unprecedented wealth transfer; according to the Chartered Professional Accountants of Canada, an estimated $1 trillion of wealth is expected to move between Canadian Baby Boomers and their children from 2023 to 2026. A large part of this wealth includes investments and homes, such as cottages.
According to a recent Leger survey conducted for RE/MAX Canada, 17% of current cottage owners say their children don’t want to inherit their cottages. That leaves a whopping 83% who are preparing to have their children and grandchildren take over ownership.
If you’re planning to leave your family cottage to your next of kin, or are going to inherit a cottage someday, then you’ll want to think about what it means for you and your family financially.
Passing Along the Family Cottage
To sell or not to sell? Real estate tends to be a good investment, especially in Canada’s cottage country, but there are many factors that need to be considered before passing on the torch. Many Boomers are planning what to leave to their children, and deciding what to do with the family cottage is a part of their succession planning.
“When it comes to succession planning, cottages are always a solid addition to any real estate portfolio,” says Christopher Alexander, President of REMAX Canada. “Given the long-term return on investment they typically deliver, a cottage is an excellent opportunity for inheritance planning.”
A Leger survey for RE/MAX Canada’s 2023 Cottage Trends Report found that 42% of current cottage owners were holding onto their properties with the intention of passing them down to family. In 2025, the updated survey showed that only 17% of cottage owners plan to sell, meaning that many are still planning to pass on their cottages. In addition to that:
- 56% of Canadian cottage owners have already put or plan to put their property in their beneficiary’s name.
- 74% feel confident that they’ll be able to pass their cottage down through their family.
- 48% say working with a real estate agent was helpful when thinking about succession planning.
If you are planning to pass down or will be inheriting your family cottage, you’ll want to prepare in advance by asking yourself the following questions:
- Should you sell the property or hold onto it?
- Should you buy out the other beneficiaries or manage it together?
- What are the tax implications of inheriting a secondary property?
- Should you make the cottage your primary residence? Check out our blog post on The Rise of Full-Time Cottage Living.
The answer to these questions will depend on both your familial situation as well as current market conditions–both things that may change by the time the cottage is actually passed down. Still, having an idea of how you’ll approach these questions is never a bad idea.
Capital Gains Tax
Capital gains tax is applied to the profit made from the sale of an asset, such as real estate, stocks, or bonds. Depending on how long you've held this asset, the capital gains made when selling could be quite significant—especially when it comes to real estate.Note: Capital gains tax will not apply if the cottage was the primary residence of the owner.
Here’s how it works with cottages:
- The estate of the deceased will owe capital gains tax based on the increase in value of the cottage from the time they bought it to the date they died.
- The beneficiary will only have to pay capital gains tax when they sell the property. The tax will be based on the difference between the fair market value when the property was inherited and what it is sold for. This will not apply if the beneficiary moves into the cottage as their primary residence.
- If the family cottage has joint ownership, all parties would pay capital gains tax when the property is sold. If one beneficiary buys the other out, the seller would pay capital gains tax on the difference between the fair market value of the property when the original owner died and whatever they received from the person buying out the property.
If you’re in the position where you’re inheriting an entire estate, including the family cottage, the capital gains tax payable by the estate will reduce the overall value of the estate. If there aren’t enough additional proceeds to pay the capital gains tax when the time comes, the estate may need to sell the cottage in order to cover it.
Handling an estate can be a complicated and emotional matter, but clearly laying out your plans will help you and your family financially. Don’t be afraid to bring in professionals to help you with succession planning, and discuss all options with your family.
Note: Your personal income tax filing levels and the province you live in/where the cottage is located will affect tax rates.
If you're thinking about selling your family cottage, check out RE/MAX's 2025 Cottage Trends Report for an idea of where cottage prices are heading in Canada. Contact an agent with experience in your cottage's area if you want a full run-down of market trends in your area.
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