So, What’s The Deal with Property Taxes?
You bought a home and you think you just need to worry about the price, right? Nope.
One of the biggest adjustments made by lawyers to the price is revolves around each party’s share of the property taxes.
Each municipality's property taxes are for the period of January 1 to December 31, however, some, for example, Regina, don't set their levy until May and then taxes are due by June 30th instead of December 31st. This is often a source of confusion.
Therefore, it can be tricky depending on the time of year or whether the seller is on a tax instalment plan with the municipality-because it matters whether taxes have been paid to the municipality or not-but, generally, it goes something like this:
|Municipal Property Tax||$2,575.42|
|Amount of Tax Per Day||2575.42/365 = $7.0559452 per day|
|June 7 Possession||158 days - seller; 207 days - Buyer|
|Seller's Share||158 x 7.0559452 = $1,114.84|
|Buyer's Share||207 x 7.0559452 = $1,460.58|
An apportionment of property tax then takes place based on whether taxes have been paid, either partly or wholly, which sees the purchase price either increase or decrease.
If taxes have not been paid to the municipality by the Seller then the Buyer will be responsible for ensuring that the tax is paid to the muncipality.
Note, different areas of the province have different practices. Sometimes lawyers will require the seller to pay their share directly to the muncipality. Other times the adjustment is simply incorporated into the price, either reducing it or increasing it.