The hidden costs of cottages: Part Two

Yesterday, CREW brought you part one in a series on the hidden costs of cottage investment, specifically related to tax implications. Now, Christine Van Cauwenberghe, the assistant vice-president of tax and estate planning at Investors Group, identifies other expenses for cottage owners and investors to consider before heading into the hinterland.

There may be different types of insurance specifically relevant to cottage owners, Van Cauwenberghe said, especially if the owners expect to use the property as a rental. Property insurance might be more expensive because of the property’s location, accessibility and whether it is used seasonally or year-round.

Financing, meanwhile, might be more difficult to obtain for a vacation home or the conditions might be different.

“Let’s say [the property] is on a remote island, or maybe it’s only used seasonally, or it’s located in an area where there are more forest fires or avalanches,” Van Cauwenberghe said. “Maybe the lender isn’t as comfortable with that as something in the city.”

Van Cauwenberghe said many cottage owners find it easier to get financing on their urban home, and purchase a vacation property that way.

Finally, maintenance and renovation costs are often higher in the more remote regions where cottages are located.

“If you’re not going to be occupying the property on a regular basis, do you need to hire a maintenance company to oversee the property when you’re not around,” Van Cauwenberghe asks. “Some cottages are more susceptible to break-ins, some people want the property ready to go, so to speak, as soon as they get up there.

“Maintenance and renovation costs might be more expensive up there because there aren’t as many people in the area so it might be harder to find people [to do those renovations or maintain the property] and you need to pay a premium for that.”

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