# New Property - Odd Question



## Dawson (Jul 13, 2011)

I thought I would pose an odd question for the group in hopes someone has a creative answer. I realize this is not typical 

I own a nice waterfront property in Muskoka, Ontario. I spend about half my time up there and will eventually move up there full time.

My property is surrounded by a large parcel of land that was held by another family for generations. It recently came up for sale and I quickly jumped on purchasing it. Reality is I only purchased it to prevent others from developing close to my cottage.

This parcel of land is all land locked, is a mix of decent land as well as a small creek, pond and some marshland. Its zoned R-1.

The question I have is in regards to tax and income management. I have no real plans for the property, the money I had to spend was allocated for other investments which it now isn't, and was curious if anyone has experience in this area. I purchased the property outright (no mortgage). I am a high income earner that pays a significant amount in income tax annually. I'm trying to decide what to do with the property and wondering if there's any opportunity to use it, or manage it in a way that helps mitigate (or at least get some deduction) in taxes.

Any thoughts?

I do also have a side consulting business I run and a couple rental properties I own and manage although i doubt those are any way applicable here.


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## MoneyGal (Apr 24, 2009)

I have to say I'm not totally sure what you are asking. Owning real property already provides tax-preferred outcomes (via the inclusion rate for capital gains). 

If you lease or otherwise "use" the property in question to create income, that will increase the tax you pay - unless you create a loss from your business use of the property, which will only be allowed for so long. 

If you take depreciation against the property (somehow) it will be added back in when you dispose of the asset.


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## Dawson (Jul 13, 2011)

I guess the simplest way to put it is i am trying to find useful and creative ways to put the money now invested in this plot of land to use as opposed to have it sit doing nothing.


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## Sampson (Apr 3, 2009)

can you sub-divide, and sell a portion while maintaining your buffer zone?


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## Charlie (May 20, 2011)

it's a personal use asset. Not much different then if you'd done a major reno to the cottage.

If you're looking to put the money now invested there to use, I suppose you could borrow against the land and buy investment assets. Your interest could then be deductible.


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## sags (May 15, 2010)

There are some environmental groups who will pay 1/2 the value of the property to put an environmental lien on the land so that it can never be developed. The owners retain ownership and use of the land, but if the land is ever sold the lien remains on the land. The money the environmental group pays out is to offset some of the cost of the restrained sale price due to the lien. 

Other plans involve an outright "gift" to the environmental group in return for a tax credit.

Something to look into.............?

Edit...........found this link to a website. There are some email addresses and links on the website that may be helpful.

http://www.orlandconservation.ca/securing-land-through-partial-takings-for-land-trusts-in-ontario

Dug a little deeper..........this link for the Muskoka area, called the Muskoka Heritage Trust.

http://www.olta.ca/Members_Map.Members.muskoka_heritage_trust.gk

The Muskoka Conservancy accepts donations of land across Muskoka as both Nature Reserves and Conservation Easements. If you would like to discuss land donation, please contact Kristie Virgoe at 705-645-7393 ext. 204 to discuss your options and learn more about land donation.


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## NorthKC (Apr 1, 2013)

Hey, thanks for that little tidbit. Just finished having a client come in and asking me if that was an option.


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## Dawson (Jul 13, 2011)

Great options! I will look into that

There are a couple parcels that could be subdivided so that is an option, total acreage is 55

Also, the land lien is something I had not known about I sincerely appreciate you bringing that up. It keeps the purpose of the property intact while providing a financial return.


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## Retired Peasant (Apr 22, 2013)

You might also consider the Conservation land tax incentive program. No lien involved.


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