Photo Illustration by The Globe and Mail. Sources: Getty Images
The beneficiary: Married with a university-aged son, “Monica” is a 62-year-old account manager in a big city. Since both she and her son are only children, passing the three-bedroom, three-season family cottage down the line should be an obvious, easy and straightforward no-brainer. In practice, not so much.
The inheritance: Almost 20 years ago, Monica inherited a cottage property from her father, who had grown up on the multi-acre, double-dwelling property. “They rented it for many years until it came up for sale, so they bought it properly in the ‘50s for a few thousand dollars,” says Monica. The large property has since been severed into smaller lots and distributed amongst extended family.
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Some but not all have sold their piece in recent years, leaving Monica’s remaining plot of land surrounded by new neighbours building new (and big) cottages all around her. Even in a chilly cottage real-estate market, the value of her small, hot-tub-less, speedboat-free humble abode is probably creeping up to a million dollars. A buyer would almost certainly tear it down and start over.
What she learned: Like many OG cottage owners, Monica’s free-seeming property actually costs a lot of cash to keep and maintain. “I think often property is passed down without any way to fund it, which was my situation,” she says. Then in her early forties with a toddler in tow, Monica faced an annual $10,000 property tax bill – on top of her primary home in the city, of course – that felt “almost unsustainable.”
Inheriting a cottage property all on your own has some obvious perks, like “there’s no splitting, there’s no arguing, nobody’s fighting over anything.” But it also means there’s nobody to split the bill and share the work, of which there was just too much for Monica and her young family. “I sold one piece to my uncle right away, then another to friends who planned to build a place, then they sold it to a stranger,” she says. More people, traffic and noise make the cottage experience not as great as she remembers.
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Even with a mere fraction of her original land – albeit the fraction with 200 feet of gorgeous waterfront– Monica’s property tax for the cottage has crept up to almost half what it was before. So too has water and electricity, and surprise expenses pop up every few years (most recently, when rain started dripping in, an expensive new roof). “Everyone thinks it’s so great to have a cottage,” she laments, “but it’s an enormous burden on your wallet and lifestyle. It’s much better to have a friend with a cottage.”
And how about a mom with a cottage? “My son loves it here, grew up here and he wants to be able to use it with his family some day,” says Monica. The key words here are some day: “My son’s only 22, he’s in school, so he’s grown-ish, he thinks, but nowhere near ready to inherit a property. He thinks he wants to be gifted this cottage like I was, but is it a gift or is it a burden?”
What she’ll do with it: For now, as she has for longer than she’d like to admit, an uncertain Monica is wavering back and forth about loving or listing her cottage. Her husband is on board for whatever she wants to do, but the pressure to keep the place – from its family history, happy memories, her son’s heartstring-pulling desire to stay forever – is real and intense. During COVID, the cottage was “a godsend” they couldn’t imagine not having; a few short years later, however, she’s imagining what the money could do.
Cashing in on the cottage would not only save her son from the same financially precarious situation she’s been in for two long decades, but it would propel him forward in any number of directions. It would put him through school, let him chase his dreams, fund some family vacations elsewhere for once. (Monica’s currently daydreaming of a summer in Europe.)
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Even after capital gains tax, plenty of leftover cash would help put a young graduate well ahead in a notoriously challenging job- and real-estate market. “This money would make a huge difference in my son’s life,” she says. “He could put a down payment on a first house without worrying how to afford a second property. We could put a significant chunk toward our retirement to take that stress off him.”
But he wouldn’t have his cottage, so he’s asked her not to sell just yet, and that’s all it takes to trump all the rest. At least for this summer season, Monica’s hanging out a little longer on the fence – albeit in the sunshine with a fabulous view.
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