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What do I do with my timeshare?

What is a Timeshare?

In simple terms, a timeshare is ownership of a property (typically, a vacation home) for a limited period of time (one to two weeks).

Timeshare Contracts

As all timeshare contracts are different, it is important to understand the specific terms of your agreement. In addition to maintenance fees, owners may be required to pay a special assessment if, for example, structural damage occurs to the property. Many timeshares are old and need to be reconstructed, and the cost of this could pass on to the owners if there is a provision in the contract stating so.

Inheriting a Timeshare

Most timeshare agreements include an “in perpetuity clause”, meaning that the individual who inherits the property can be required to pay the annual maintenance fees for the length of time it is owned. This obligation would pass on to any individual who inherits the timeshare upon the original owner’s death. While the beneficiary can be held liable for this...

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Why do I need an RPR with compliance to sell my home?

real estate Mar 18, 2020

A Real Property Report (‘RPR’) is a document that is prepared by a survey company; it shows the structures plotted within the borders of property and outlines where they are located in relation to the border lines.

The report is then sent to the property’s municipality to determine whether the structures (including buildings, decks, fences, garages, sheds, etc.) comply with municipal bylaws and have the required building permits. If all regulations are met, the municipality will provide a Compliance Certificate.

It is imperative that a seller obtains an RPR prior to accepting an offer from a buyer for two main reasons: (1) The standard Real Estate Purchase Agreement states that the seller will provide the buyer with an RPR prior to the deal closing; as such, it is highly recommended to complete this sooner rather than later. This will likely reduce costs and alleviate stress for both parties; (2) If the report indicates that there is an issue with compliance after...

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Capital Gains Tax on a 1994 Property

real estate tax Nov 27, 2019

Recently our office has dealt with several estates where the deceased had purchased property prior to 1994. The property included cottages, artwork, rental properties and business. 

Back in 1994 the government eliminated the general lifetime exemption of $100,000.00 on all capital assets. To make up for the elimination, and to make sure anyone who had property and didn't sell it would still get this benefit, the Revenue Canada (now called the CRA) allowed a one time election (using form T664) that permitted taxpayers to "bump-up" the tax cost of the property by a maximum of $100,000.00. The election made sure that future liabilities would be minimized. In many estates, the executor cannot find the filed election, or even know if the election was filed. 

If you still own property that you made an election on in 1994, make sure that you have a copy of your 1994 return available, and that the executors of your estate are aware of it. This is important to ensure that the tax...

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What do I do with the family cabin?

Family cabins provide memories of times sitting in the sun, sipping wine or drinking beer, however for some families the cottage goes from being the family castle to being the family haunted house.

Whenever a married couple owns a family cottage their wills should state who gets the cottage after the last of them dies. Many time the couple will want to give the cottage equally to all their children equally. While other times people may want to create various other vehicles for the ownership of the cottage such as the creation of a family to purchase the cottage, creation of a family trust, or a shared ownership agreement for the land. All of these schemes have their own positive and negative points and each families circumstances will determine which mechanism is the correct way to deal with the cottage. 

The best time to determine what should be done with the family cabin is when you are alive. After you die the options for handling this asset are extremely limited. If...

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9 Things to Consider When Selling Your Home (Part 2)

real estate Jul 03, 2019

Purchasing a home is likely to be the largest investment you make in your lifetime – so when you are ready to sell, it is important for you to understand the process of doing so.

In our last blog post, we discussed the first five things to consider when selling your home. Here are the final four considerations:

SIX: Fixtures

On the Purchase and Sale Agreement, the Seller must clearly identify the fixtures being sold with the house and differentiate them with the items they plan on taking that are attached to the walls, ceiling, or floor. Fixtures include anything that is physically attached to the property – such as furnaces, lighting fixtures, and satellite dishes. Household items that you can easily transport, such as patio furniture, sheds, picture mirrors, and picnic tables are not generally considered fixtures.

SEVEN: Closing Date

The closing/possession date will be stated in the Purchase and Sale Agreement. It is on this date that the property being sold is...

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9 Things to Consider When Selling Your Home (Part 1)

real estate Jun 26, 2019

Purchasing a home is likely to be the largest investment you make in your lifetime – so when you are ready to sell, it is important for you to understand the process of doing so.

In this blog post, we will discuss the first five things to consider when selling your home: 

ONE: Hire a Realtor

While hiring a realtor is not a legal requirement to selling a home, the benefits of doing so may outweigh the costs. They are experienced in the field of real estate and may be able to offer insight into how to market a home, are likely to have contacts with potential buyers, and will deal with any negotiations that may arise with respect to the selling price. Given that realtors are provided with a set commission rate, they are incentivized to sell the home at an above-average value.

TWO: Sign a Listing Agreement

If the Seller chooses to hire a realtor, they realtor will ask the Seller to sign a Listing Agreement. This is an agreement that establishes the realtor’s commission...

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Should I put my children on title?

real estate tax Jun 12, 2019

What are the perceived benefits of joint ownership?

The right of survivorship is a convincing attribute of joint ownership. The law states that when one of the joint owners passes away, the surviving joint owner(s) will automatically obtain the deceased person’s share. Accordingly, the asset would flow outside of the deceased person’s estate. If an asset flows outside of an estate, it will not be included in the overall value of the estate that is subsequently used to determine probate fees. While this may seem like a good idea at face value, the risks outweigh the benefits – especially in Alberta, which levies a flat probate fee that currently caps at a maximum of $525.

Let us explain:

Risks:

  1. Deemed Disposition Tax: According to the CRA, “deemed disposition” is a term used when a person is considered to have disposed of a property even though a sale did not take place. Following that logic, when property is transferred to another person (other...
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Vacation Properties: How should these be included in my estate plan?

The number of Albertans looking to purchase a vacation property is growing every year... and that’s not surprising! There is nothing better than owning a chalet for weekend ski trips, or a house in Palm Springs, or a place on the golf course in Phoenix.  However, if you own a vacation home, you need to ensure that you have taken it into consideration when you are making your Will and planning your estate.

Something that many families fail to consider is how the location of a vacation property can impact their estate planning.  This is an important consideration because the way that you protect and pass on your vacation property will depend on the applicable laws in the country or province where the property is located.

For example, by owning property in the USA, your estate will be liable for both US and Canadian estate taxes.  Further, by owning property in the USA, you will have two estates that will need to be settled, adding considerably to the amount of...

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How should I include the family cabin in my estate plan?

Many Albertans have fond memories of spending long summer days at the family cabin with parents, siblings, cousins, grandparents, and aunts and uncles – and their intention is usually that future generations will be able to enjoy this family cabin experience as well.  As a result, passing on the family cabin is often a priority when creating an estate plan.  Unfortunately, complications may arise, both tax and otherwise, that can create challenges.

Whether you decide to transfer the cabin while you are still living or as part of your children’s inheritance, capital gains tax will be owing to the extent of any increase in the value of the property.  Some people try to get around these issues by listing their children’s names on the title to the property, but this too can create significant financial and emotional issues for families. 

Some of these issues are as follows:

  • If someone in the family divorces, a portion of the cabin property’s...
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The Dangers of (and Alternatives to) Joint Tenancy

real estate Dec 19, 2018

In my practice, I am frequently consulted by seniors who are considering putting their home or cottage into “joint names” with their children. This way they can avoid Estate costs and taxes. While that is true, there are a few factors and legal consequences that people should be aware of before they place their land into joint names with a person other than their spouse. For instance:

  1. Probate fees in Alberta are relatively low and are a maximum of $525.00 for estates more than $250,000.00;
  2. There is no Estate tax payable in the Province of Alberta;
  3. Transferring property into joint ownership with someone other then your spouse may trigger income tax consequences if the property has appreciated in value. It may also result in unforeseen tax consequences such as property tax subsidies or “clawback” provisions.
  4. Joint ownership means joint control – the new “joint owner” will have rights and interests in the property
  5. The property may now be...
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