Property Taxes.... the bane of a homeowners existence. You don't like paying them but the city/county needs them to keep running and to keep up the maintenance of roads etc...
Property taxes are usually due once per year, on June 30th. This is for the entire calendar year. Some cities give you a break of 1 to 3 % on your taxes if you pay them in full earlier.
The amount of property taxes due is normally based on the assessed value of your home and property on a given date. This is then figured into the “mill rate” and the outcome is how much you have to pay. The city/county can adjust the mill rate to get the amount of money from each homeowner required for the coming year.
School taxes are often wrapped into the property taxes to fund the school systems in the city. It’s not the best method, because sometimes homeowners don’t have any kids or they go to a private school etc. It is about the easiest method and the only choices a homeowner can make are to have their school tax go to the public schools or separate schools in their area, if they are split like that.
Payment of property taxes can usually be done in 1 of 3 ways:
a) with your mortgage, through your lender. This is convenient because you don’t have to worry about it. It’s also good for the lender because it ensures your taxes are paid because the city is higher on the title for your home in case you default, than the lender. (I’ll cover the title to your home in another blog entry)
b) monthly, through the city. This is done through pre-authorized automatic payment. Sometimes called T.I.P.P.S. (Tax in Installments Payment Plan Service).
c) lump sum payment. Write a cheque to the city. This is where you can save by paying early. Although, most people don’t have that much cash to put down at one time.
When buying a home, there might be a tax adjustment required depending on when you are taking possession of your home. If it’s before June 30th, the seller gives you the years taxes up to possession day, and if it’s after June 30th, then you have to pay the seller back for the rest of the year. This is normally handled through the lawyers, but you still have to budget for it in your closing costs.
Lastly, some cities have higher taxes than others (St Albert vs Edmonton or Bon Accord vs Gibbons). You have to look at the community and the services provided to judge for yourself whether the higher or lower taxes is a factor in your buying decision.
This blog entry is for informational purposes only, because different cities and counties can operate in different ways. It’s best to check with the city, your lawyer, and also your lender, to ensure you have up-to-date info on that area.
