How Life Insurance Can Be Used To Offset Taxes On A Cottage

Many Canadians enjoy the tranquility of a cottage. A recent survey from Royal LePage showed that 89 per cent of Canadians believe that a vacation property is a healthy long-term investment. However, an Angus Reid poll of cottage-bound Canadians revealed that 46 per cent were concerned about the taxes.

When an individual dies, assets can be transferred tax-free to her spouse, but when the second spouse dies, his assets are passed on to their children or other heirs, creating a tax bill on the gain.

This tax is paid before the heirs receive anything. An asset like a personal residence is exempt from this type of taxation, but cottages generally won't be exempt and will be considered a capital asset.

Life Insurance Options to Offset Potential Taxes to Your Estate

Life Insurance can be a terrific tool to create liquidity in an estate and provide tax-free funds to offset future tax liabilities.

Under normal circumstances, when one spouse dies, the deceased spouse's assets can be transferred tax-free to the other spouse, but when the second spouse dies, most assets are passed onto their heirs, and this triggers a tax liability.

Tax Saving Tips for Canadians

The latest article in the life insurance tips section would be an eye-opening guide titled Nine Tax Saving Tips for Individuals. Read it now and save money!