This 68-year-old's Muskoka cottage bills top $18,000 a year — should she sell before her son inherits it

In this hypothetical example, let’s imagine that Joan has owned a waterfront cottage in Ontario’s Muskoka region for 28 years. Her son Ted has fond memories of summers spent there and hopes to inherit the cottage himself one day. Let’s also assume that Joan’s property taxes, insurance and maintenance fees on the cottage now run more than $18,000 a year — over double what they were a decade ago.

Joan feels the pull to make her son’s dream come true, but she’s also worried about the costs piling up on a fixed income. So should she keep struggling to preserve the family legacy, or is it smarter to sell and downsize? Here’s are the factors she should weigh.

Retirement needs to come first

While Joan may want Ted to inherit the cottage, that gift shouldn’t come at the expense of her own retirement security. A drop in financial well-being can affect an older adult’s quality of life, and the stress of continuing to pay for an aging cottage could take a real toll. Joan may also start to resent her son if she feels trapped, unable to use that money for anything else — especially since there are lots of cottages, but Joan has only one retirement.

“A trusted advisor can help cut through the complexity, create a clear financial plan, and help give people the confidence that they're taking the right steps - no matter where they're starting from” said Paul Lalonde, head of wealth planning at BMO Private Wealth Canada. Sometimes the greatest gift a parent can leave isn’t the cottage itself — it’s the financial security that comes from making a smart decision now.

There could be solutions worth exploring first

That doesn't mean Joan needs to list the cottage tomorrow, though. It makes sense for the family to sit down and discuss Joan’s overall financial picture first. Perhaps Ted can take on some of the yearly costs as a kind of investment in his future inheritance. Cottages remain popular among Canadian families to hold onto and pass downf. According to REMAX Canada’s 2026 Recreational Property Report, 60% of current cottage owners view their property as part of their long-term wealth strategy, while 45% of prospective buyers view a recreational property as an entry point into homeownership.

“We're seeing recreational properties play an increasingly important role in how Canadians think about legacy and wealth transfer,” said Don Kottick, president of REMAX Canada. “For many, it's about building equity in a different segment of the market while creating something tangible that can be held, leveraged, and passed down across generations.”

Joan may want to avoid making Ted a co-owner while she’s still alive, though. Under Canadian tax rules, when a parent dies still owning a cottage outright, the Canada Revenue Agency (CRA) treats it as though it were sold at fair market value on the day of death — known as a deemed disposition — and the estate pays capital gains tax on the increase in value, calculated using the standard 50% inclusion rate. Ted would then inherit the cottage with its cost reset to that fair market value, meaning he’d only owe tax on any further gains from that point forward. But if Joan gifts him a share of the cottage now, while she’s alive, Ted inherits her original, lower cost base for that portion instead of the “reset” value — which could mean a bigger capital gains bill down the road when the cottage is eventually sold.

A reverse mortgage is another option worth considering, though not necessarily against the cottage itself. Canada’s CHIP Reverse Mortgage, from HomeEquity Bank, lets homeowners age 55 and up access up to 55% of their home’s value in tax-free cash, with no required monthly payments. The loan, plus accumulated interest, only comes due once the home is sold, the owner moves out permanently, or the last borrower dies.