Dip your toes in a tax hike
By JAMES RUSK
Globe and Mail
October 22, 2005
When Ian Connerty decided this summer that he wanted to build his retirement home in cottage country near Haliburton, he planned an orderly retreat from his Beaches apartment and rented a house near Minden to start looking around.
And that's when one of the realities of cottage-country real estate hit him. If he was able to find a waterfront dwelling, his taxes would be three to four times the taxes he would pay for similar property off the waterfront, agents told him. And if he wanted to build, an unserviced lot on Gull Lake was $69,000, while a serviced lot of a similar size in nearby Minden was $16,000.
"There's your difference," Mr. Connerty says. "That's typical everywhere I've looked in the county."
His experience was driven home this week when the latest property assessments were delivered across the province: across almost all of Ontario, waterfront property owners faced assessment increases much higher than those owners who can't dip their toes at their own shoreline.
But while cottage owners may be screaming about their assessments, the assessment is a symptom, not the disease.
It reflects the soaring prices that are making it harder for the middle class to own a cottage, even a modest wooden one on a piece of what was once a nearly worthless shoreline -- the sort of place that, for generations, middle-income families retreated to each summer.
In recent years, real-estate price surveys across the country have shown the value of waterfront properties outrunning the market by a wide margin.
And that is what the rising assessments reflect, even if imperfectly.
"The reality is that an increasingly large burden of rural Ontario's municipal tax burden will land on the waterfront property owner," says Terry Rees, executive director of the Federation of Ontario Cottagers' Associations.
The boom may have started on the desirable lakes close to Toronto, but it has now spread widely among Ontario's 250,000 or so waterfront properties -- including modest cottages on lakes that have not been and never will be trendy, Mr. Rees says.
From 1999 to 2003, more than 100 Ontario municipalities saw the assessed value of waterfront properties gain more than 10 percentage points over the value of non-waterfront properties.
In the municipality of Central Huron around Goderich, the average assessment on waterfront property went up by 78 per cent, while non-waterfront property went up 13 per cent.
"Many of them are family properties that are either going to be retirement homes or are intended to be a legacy property that is going to be passed from generation to generation," he says. "These ... may have been worth $100,000 to $150,000, and now are worth $300,000."
And while the prices of top-end properties have levelled out, he notes that increases are still hitting the entry-level cottages. Properties worth $100,000, he says, "just don't exist any more."