Josh Gryschuk

🇨🇦 A CANADIAN FAMILY INHERITS A $900,000 COTTAGE. THE CRA CAN TRIGGER A SIX-FIGURE TAX BILL WITHOUT ANYONE SELLING IT. And most Canadians don’t realize this can happen. Imagine a couple who bought a small Ontario cottage 30 years ago. They paid $200,000. Raised their children. Spent every summer making memories by the lake. Today, the cottage is worth $900,000. The mortgage is paid off. Their dream is to leave it to their children. Sounds wonderful, right? Except there’s something hiding in Canada’s tax system. It’s called DEEMED DISPOSITION. When the surviving owner dies, the CRA generally treats the cottage as though it were sold at fair market value. Even if nobody actually sells it. Even if the children simply inherit it. Let’s do the math. 🏠 Original purchase price: $200,000 📈 Current market value: $900,000 💰 Capital gain: $700,000 💸 Taxable gain at 50% inclusion: $350,000 🏛️ Illustrative income tax at 40%: $140,000 Read that again. A $140,000 TAX BILL WITHOUT A SINGLE DOLLAR IN SALE PROCEEDS. And here’s what most people miss. Canada doesn’t generally impose a separate federal inheritance tax. But that doesn’t mean inherited property is free from tax consequences. The tax is generally payable through the deceased owner’s final tax return, with the estate responsible for settling it. Now imagine the children want to keep the cottage. They have mortgages. Families. Bills. Where does the estate find $140,000? Sell investments? Borrow against the property? Or sell the cottage altogether? That’s the uncomfortable reality. YOU CAN INHERIT A MILLION-DOLLAR PROPERTY WITHOUT INHERITING THE CASH NEEDED TO KEEP IT. Now, there are important exceptions. Transfers to a surviving spouse can defer capital gains. The principal residence exemption may reduce or eliminate the tax. And documented improvements can reduce the taxable gain. But these require planning. And that raises a bigger question. WHY DO WE SPEND DECADES BUILDING FAMILY WEALTH WITHOUT PLANNING FOR THE COST OF PASSING IT ON? Because owning an asset and having the cash to preserve it are two very different things. YOU SPEND 30 YEARS PAYING OFF THE FAMILY COTTAGE. YOUR CHILDREN MAY STILL NEED A LOAN JUST TO KEEP IT. 🍁 @wealthmoose