Selling your cottage can go a long way towards funding your retirement, especially if you find yourself using it less and don’t want the bother of using it as a short-term rental property. Before you make the decision to sell, you’ll first want to make sure that you can get as much as possible out of the sale. Many renovations and improvements can significantly boost the property value of your Muskoka cottage.
The summer season is the ideal time to get a head start on renovations that boost the value of your property. From increasing energy efficiency and replacing the roof to ensuring that your cottage’s septic, electrical, and heating systems are up to par, here are a few important renovations to make before you sell your cottage.
Capital gains tax considerations
Before you go ahead with renovations that will boost your property’s value, you’ll first want to consider the capital gains tax implications involved with selling your cottage. Capital gains tax will apply to the sale of your cottage unless you’re able to use a principal residence exemption. If you’ve been using your cottage as your principal residence for a time, you’ll only have to pay capital gains tax for the appreciated value of the years when your cottage wasn’t the principal residence. If you aren’t using the cottage as your principal residence, you’ll be forced to pay capital gains tax for the appreciated value and any improvements you’ve made.
For example, if you purchased your cottage in 1980 for $100,000, but are looking to sell it for $400,000, you’ll be forced to pay capital gains tax on the difference between the purchase and selling price – in this case, $300,000. Before you proceed with renovations, add together the cost of capital gains and the improvements you plan on making to ensure that you’ll make enough from the sale to justify the renovations. This will allow you to make a more informed decision about your property, ensuring that you get the most out of the sale.
You’ll also want to save any receipts from the renovations you do, as they can be used to offset the amount of your capital gains. As the linked article from MoneySense states, only upgrades count as capital expenses; not anything that would restore something in the home to its original condition. For a full list of what is a current (non-claimable) or capital (claimable) expense consult the CRA’s website.
Increasing energy efficiency in your cottage
Energy efficiency is here to stay. Nobody wants old drafty windows and doors – not only do they cost more on your hydro bill, but they can have a massive effect on your overall comfort. Replacing those old doors and windows with high-performance ones will ensure that energy loss is greatly reduced, adding value to your property, ensuring that the future owners will be comfortable year-round, and updating the overall look and feel of your cottage. To maximize energy efficiency and comfort, consider replacing old windows with triple-glazed windows – especially if you will be selling your property as one that will be used year-round. Solid doors with a good seal, as well as new, non-wheezy screen doors are a good idea too.
Replace your old roof
If your roof is coming up on its useful lifespan, it’s time to start seriously thinking about replacing it. Replacing the roof of your cottage will increase its property value, giving potential buyers much less to worry about when making a purchase decision. The roof may simply need new shingles, or might require more significant repairs. In order to find out for certain, we recommend consulting a roofing company who will be able to give you concrete answers. Not only will a new roof mean less maintenance for potential buyers, but it’ll also increase its curb appeal – nobody likes pulling up to a property only to be met with peeling shingles in dire need of replacement.
Update the kitchen and bathrooms
Most experts recommend updating your kitchen and bathroom(s) before selling your property. These upgrades will increase property value, and refresh the interior of your cottage. In your kitchen, look at replacing things like countertops, cupboards and drawers, and upgrading old appliances to new energy efficient models to save on energy costs and reduce your carbon footprint. If you get mice, it may be worth having an exterminator in to plug any entrances they have before your renovations start to stave off any damage they may cause to your new kitchen.
In your bathroom, it’s recommended that you paint the walls, install new faucets and hardware, and potentially upgrade the shower and/or toilet for maximum effect. Adding premium touches like heated floors and a luxurious tub or shower can also go a very long way in upping the value of your property.
Make sure the plumbing and electrical is functional and up to code
Nobody wants to buy a cottage if they’re constantly going to be wrestling with the septic system and wiring. Before you decide to sell your property, it’s a good idea to ensure that everything is up to code. These things will inevitably come up during a home inspection and quickly change even the most eager buyer’s mind.
If your septic system isn’t working as well as it once did, now’s the time to upgrade it to ensure that the future owners won’t have to deal with a bad septic system every spring. Hiring an electrician to upgrade the wiring and ensure that everything is up to code is also a good idea, especially for older properties.
With the right amount of care and attention, you can easily turn your cottage into a four-season property, greatly increasing the property value and making it a highly attractive purchase for prospective buyers. Without renovating your cottage, you risk losing out on potential buyers, and even worse, you’ll be leaving thousands of dollars on the table.
Pick up around the lakefront
One of the main reasons people buy a cottage in Muskoka is so they can play in the water. If your lakefront is even rugged by Muskoka standards, trim back shrubs and make it look a bit neater. Now is the time to get rid of those plants that are growing through the slats in the stairs leading down to the water, and maybe slapping a new stain or neutral paint on that same stairway. As far as landscaping the rest of your property goes, it isn’t as important as your lakefront but you’ll want to make sure that any visible lawn is weed-free and mowed when your potential buyers come to visit.
Unsure? Have a home inspection done
If you aren’t sure which renovations will generate the most value for you, it’s worth paying for a visit from a home inspector. They’ll be able to give you a prioritized list of what you need to fix up before you sell. They’re used to conducting home inspections for buyers, so they know exactly what they’re looking for and can give you great recommendations that are customized for your property. Having a Realtor look at it is a good idea too, but a home inspector will be able to give you a more in-depth assessment.
To find out more about the energy efficient window and door products offered by Muskoka Window & Door Centre, contact us today.