Ever wondered if you should hang on to your cottage or sell it? What are the benefits of renting a cottage instead of owning it?
A cottage brings great joy to many people, but along with the joy can be a fair bit of grief. The more clients we talk to, the more we hear people complaining about the upkeep and the cost, and the family squabbles. There must be a better way. Today, there is a way to have your cake and eat it too. Simply type in “cottage rentals” in Google, and you can see thousands of cottages in minutes.
So here now are 5 reasons why we think you should consider selling your cottage and renting:
1. Avoid big tax bills at death. This is one of the biggest estate planning problems. The family cottage was bought for $40,000, 40 years ago. Today it is worth $600,000. The older parents want to keep it in the family and pass it to their 3 children. When the second parent passes, there is a tax bill of $135,000. Only 2 children want to keep the cottage. Only one of the kids has the money available to pay the tax bill. Lots of headaches (although proper insurance planning can help).
2. Avoid big family conflict. Examples abound in terms of one child’s family using the cottage much more than another, and creating conflict. One family looks after the cottage well, while the other leaves everything a mess.
3. Avoid all that work by just renting for 2 or 3 weeks. A window needs replacing, and the deck needs new wood- owning a cottage can be hard work, not to mention expensive (and we haven’t even talked about property taxes!) Instead- rent a cottage and there is no fixing, few worries.
4. By renting, you can easily get the right cottage each summer for your stage of life. The right cottage for a young family is different than for a family with teenagers, which is different than the right cottage for a retired couple.
5. Feel free to see the rest of the country or the rest of the world during the summer. What if you weren’t tied to the cottage? You could take a summer vacation anywhere in the world, whether at a cottage or in the city. You could even use the extra wealth from the sale of your cottage to fund this.
We are not suggesting that selling the cottage is the right decision for everyone, but when you look at the list above, it certainly makes you think. To understand if this is the right option for now, why not try out our “Creation of True Wealth” Questionnaire? It helps you understand what “wealthy” means to you, not in a financial, but philosophical sense. This can help you decide if owning a cottage is part of that equation or not.
