Retire to the Cottage
February 29th, 2008In case you missed the article, Retire to the Cottage, in the March/April edition of Cottage Magazine (page 46-47), and you’re considering retiring to your vacation property, it might be worth picking up a copy. OK, so I’m the author, but all that aside writing this article made me stop and think about where and how I planned to spend my retirement years.
Thanks in part to the B.C. government’s new “green” budget, hefty taxes are being slapped on gasoline. This makes owning and maintaining a cottage on Vancouver Island increasingly expensive. The cost to take the ferry is up 28% over last year as a result of fleet upgrades and with rising gas prices. We currently pay $200 round trip. Assuming the cost to take the ferry rises 10% annually, in 15 years I can expect to pay $835 round trip.
And then there are the property taxes. Escalating property values continue to drive up my annual assessments. In 2007 our property was assessed at $292,500. Our tax bill was $1,284. This year our property is assessed at $365,200. I estimate our 2008 tax bill will likely be $1,600. Our taxes increased 25% in this year alone. Assuming a conservative increase of 10% a year, in 15 years our tax bill will be over $6,000. These inflated tax bills are are forcing many long-term cottagers out of their waterfront properties.
While most of the article tends to focus on the social issues of living at the cabin year round, building a new social network and adjusting to reduced amenities, it was Ralph Hahmann, a financial adviser with Dundee Wealth Management, who made me realize the financial implications are just as important. Hahmann recommends people talk to a tax planner, not an income tax prepared but a tax planner.
When it comes to retiring to the cabin, most people, myself included tend to think more about the lifestyle and the physical dwelling rather than financial sustainability. I now realize it’s equally important to have my financial house in order too.
Cheers,
Julie
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February 29th, 2008 at 9:43 pm
Bill just needs to buy a float plane. The thought has even crossed my mind. I’d need a plane lift at the lake because of the waves. Has your property taxes and assessment at the lake increased any more than your home? I think it’s all relative. You have to live somewhere. When time is ticking I think I’d like to live where I most liked to be. You stand a greater chance of your brood returning to the nest if you’re on the water with toys. Bad mother, bad, bad, mother for selling the cottage!
February 29th, 2008 at 9:54 pm
You raise an interesting point. Our home assessment is up 25% but our taxes did not increased (hmmmmm). So in that respect our taxes at the lake are rising faster than our taxes at home. You’re right we do have to live somewhere and I actually think we will do what a lot of folks do and that is spend half the year at the cabin and half the year skiing ( I actually joked with Bill when we bought Whistler that he was looking at his new retirement home - he didn’t laugh)
I keep thinking at some point property prices have to go down - but that has yet to happen, at least not in the 10 years we have owned real estate.
No plans to sell the cabin - although I’m more worried that my brood will never leave the nest let alone come back for a visit!
Cheers,
Jules
March 1st, 2008 at 12:57 am
I think it’s all relative too, but I sure am glad I don’t have ferry fees to deal with. I get ticked enough when I get my docking/marina fee each year and that is nearing $1000 annually. I’ve heard that many marinas down south charge upwards to $2000/yr or more. Yikes.
And about the brood leaving the nest — they will…. but they always come back!!!!
March 1st, 2008 at 5:27 am
Julie, expect your C.O.V. taxes to go up on the July 2nd bill. They always keep the January ‘installment’ congruent with previous years to avoid everyone disputing their assessments. By July, the the time to dispute will have expired and whammo….
March 3rd, 2008 at 7:45 pm
As an after thought, I think I would be more concerned about easily accessing health and hospital care as a retiree than taxes and property values.