Vacation Photo

As the weather warms up and Canadians head back to their cottages and cabins, many families are once again enjoying the escape and tradition of their vacation properties. These places can hold deep emotional significance—often associated with years of family traditions, long weekends, and cherished time with loved ones.

But with those memories comes the reality: What happens to the property in the future? Whether you're thinking about transferring ownership soon or passing it on after your death, careful planning is essential. Vacation properties come with financial, legal, and emotional considerations—especially when you hope to keep them in the family.

Transferring the Property During Your Lifetime

There are several ways to pass on your vacation property while you're still living:

  • Gifting the property outright to one or more children
  • Gifting a joint interest in the property to children
  • Selling the property to your children at fair market value
  • Transferring the property to a trust, with your children as beneficiaries

Choosing to transfer during your lifetime might make sense if:

  • Your children are already using and maintaining the property
  • You want to cap the capital gains at today’s value to manage future tax liability
  • You’re hoping to avoid probate fees upon your passing

However, any lifetime transfer may trigger a capital gain—the difference between the current market value and your original purchase price—resulting in a tax bill, unless the principal residence exemption applies.

Transferring the Property on Death

Alternatively, you can choose to pass on the property through your estate. Options include:

  • Outright transfer of the property to your children in your will
  • Sale by the estate, with children receiving right of first refusal
  • Transfer to a testamentary trust created by your will, naming your children as beneficiaries

This approach might be suitable if:

  • You want to retain full control of the property during your lifetime
  • Your children aren’t ready (financially or emotionally) for ownership
  • You’re concerned about protecting the property from creditors or marital breakdown
  • You want to defer tax or avoid family conflict during your lifetime

Taxation rules are the same as with a lifetime transfer—capital gains are deemed to be realized on death. If you’re part of a couple, taxes can be deferred until the second spouse passes.

Open Communication Is Key

We always encourage families to have open, honest conversations about the future of shared properties. Don’t assume everyone has the same expectations—discuss ownership, use, upkeep, and succession. These conversations can prevent misunderstandings and help preserve both the property and the relationships attached to it.

And as always, consult with a tax or estate planning professional. Every situation is unique, and the right strategy depends on your goals, family dynamics, and financial picture.