Top tax-friendly towns: Bracebridge

Located in Ontario’s Muskoka region, the town of Bracebridge isn’t your average investment town. Instead, it’s generally viewed as one of many northern hamlets that are part of “cottage country” and hence its appeal to investors looking to benefit from the lucrative short-term rental market.

In addition to its affordable properties, Bracebridge’s property tax rate is also reasonable. Municipal data showed a rate of 0.00385241 per cent for 2013.

Tax factors

One of the advantages of living, renting and investing in Bracebridge is its property tax.

There is one factor that has allowed the rate to remain affordable, and it is directly tied to a segment of the local real estate market. “The property tax rate is offset by the high assessment rate for lakefront properties,” says Ken Banks, broker for RE/MAX North Country Realty. “The residential rate is quite a bit lower because there is a big assessment base, value-wise.”

As a result, Banks believes investors should stick to standard residential properties, especially if they want to avoid paying higher taxes.

“In Muskoka, you’re benefiting if you’re not [buying] on the waterfront,” he says. “Some of those properties are worth almost $1 million, so it certainly creates a great tax base for the local municipality.”

Banks adds that property taxes in the area have seen “a modest increase, rising by 4 per cent. In recent years, we haven’t seen any kind of major increases here.”

Market performance

With an average price tag of $279,980 in 2014, according to MLS data, investing in Bracebridge is affordable. Plus, the properties can provide owners with respectable returns over time.

The CMHC reported a vacancy rate of 3.7 per cent for Bracebridge, an indicator that residential inventory typically does not spend too much time on the market.

Despite its smaller size, the town has seen a number of new condo developments built in recent years, which have brought new business to the market. These units, says Banks, are among Bracebridge’s better buys.

“There are single-family homes here, but not very many of those available,” he explains. “There are also duplexes and triplexes and condos, with condos getting the most money.”

Buyers who employ a cash-flow strategy will find condo units to be a great buy, as Banks notes that they can be rented out for up to $1,500 per month.

Looking ahead

Taxes in Bracebridge are forecasted to remain affordable in the future, with only modest increases expected. The real estate market will also remain steady, a factor that may catch buyers’ attention.

While the town’s peaceful nature and waterfront location will influence residents of other major centres to purchase cottages or second homes, the development of new residential inventory within Bracebridge will lead to many new opportunities for those interested.

Population: 253,000 (2014)
Property tax rate: 0.00385
Average price: $279,980 (2014)
Average rent: $1,500 (condo unit)
Vacancy rate: 3.7%

To learn more about Canada's vacation and recreational property market, subscribe to CREW and receive the annual 'Cash in Cottage Country' report.

This article was originally published in the June 2014 issue of Canadian Real Estate Wealth magazine


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