Buying a property offers security. You have a place to live where you don’t have to pay rent and valuable assets at your disposal. There are costs associated with buying a home like having a mortgage and paying property taxes. Most people are able to prepare for making monthly mortgage payments but property taxes are a whole new phenomenon.
What are property taxes?
Property taxes are based on the assessed value of the property. There are two components involved in a property tax, the municipal portion and the education portion. The education portion of the property tax goes towards ensuring public schools and other educational institutions remain accessible to all children. The municipal portion goes directly to the municipality.
How are property taxes calculated?
Property taxes are calculated based on your property’s assessment that is then multiplied by the municipality’s current tax rate for the type of property you own.
municipal portion of the tax + education portion of the tax = total property tax amount
Each province must follow a specific set of rules and valuation criteria during the property’s assessment. Some provinces use an annual reassessment cycle while others wait longer between valuation periods.
When do you pay property tax?
Depending on your municipality, property taxes are paid on a quarterly, semi-annual or annual interval. Each municipality is different so it’s best to check with yours to get an idea of when you’ll be paying your property taxes.
How much will you pay?
How much you pay will depend on where you live. The chart below examines Canada’s 10 biggest cities and their estimated property taxes to give you an idea.
|City||Estimated Property Tax*|
|Calgary||Per $1,000 of assessment = $6.10|
|Edmonton||Per $1,000 of assessment = $8.01|
|Halifax||Per $1,000 of assessment = $12.11|
|Montreal||Per $1,000 of assessment = $8.27|
|Ottawa||Per $1,000 of assessment = $11.27|
|Regina||Per $1,000 of assessment = $13.69|
|Saskatoon||Per $1,000 of assessment = $12.58|
|Toronto||Per $1,000 of assessment = $7.23|
|Vancouver||Per $1,000 of assessment = $3.68|
|Winnipeg||Per $1,000 of assessment = $12.13|
*based on the Real Property Association of Canada’s 11th annual property tax survey (2014)
What other taxes are associated with homeownership?
Besides property taxes, all provinces except Alberta and Saskatchewan have a land transfer tax. This is a provincial tax that is determined by a percentage of the purchase price of the home. Some provinces such as Ontario, British Columbia and Prince Edward Island offer land transfer tax rebates for first-time homebuyers. The city of Toronto also has rebates in place regarding land transfer tax. Some sellers can be nice enough to cover the price of the land transfer tax.
How to prepare yourself for property taxes?
The best way to prepare yourself for this tax is to put money aside. The amount shouldn’t fluctuate too much from year to year so you should be able to save accordingly. You can also pay your property taxes through your mortgage if your lender offers it.Back
Your home is your most valuable asset. It is probably the single largest investment you will make in your lifetime. Your home is more than a place to rest your head and raise a family. Your home contains equity. It is a treasured resource and in some cases, can even be used as an ATM (aka cash back mortgages and HELOCs – don’t worry we’ll get there).
Everyone who is looking to purchase a home will need a mortgage. But, what is a mortgage exactly and why do you need it? Besides being the term to describe a loan secured by real estate, a mortgage allows you to access funding to procure your dream home.
If you want to buy a home, but are unable to put down a minimum down payment of 20% then you will need mortgage loan insurance. Read More
If you are thinking of buying your first home then you are likely not thinking of mortgage penalties. Read More
When you sign on the dotted line of a mortgage agreement, you do so with the hope that this transaction will ultimately be very beneficial... Read More
We always advise first-time home buyers explore their mortgage options before they do anything else. Read More