When you sell your principal residence, you don't pay tax on it because you get an exemption. That exemption can be applied to a city house or a cottage, says Loren. If the cottage has increased in value more than the city home has, your parents may be able to reduce or eliminate their capital gain on the cottage by claiming it as their principal residence for some or all of the years of ownership. If your parents claim the cottage as their principal residence, they'll have to pay tax on their city house when it is sold.
15.I am worried that I am not saving enough for my kid's education, but money is so tight I don't have any more to contribute.
You might be able to free up funds by reorganizing your finances. For example, consolidating all your small credit card debts under one line of credit at the bank (which typically has a lower interest rate) could cut your minimum interest payments considerably, increasing your cash flow, says Clarkson. Consider starting a registered education savings plan because the government will match part of your contributions with a Canadian Education Savings Grant. The amount the government contributes annually depends on your net family income. (Visit www.canlearn.ca.) "The government’s contribution will help accelerate your savings," says Banerjee. And the earlier you start, the more time you have for the money to compound.
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