How Do You Pay Property Tax In Canada?

Owning a property in Canada is indeed a big thing. But it is mandatory to pay property tax as part of owning real estate in Canada. Whether you own a house, condominium, have a rental property, or a commercial building, it is your legal duty to pay property taxes. It can be an overwhelming process, especially if you are a first-time homeowner. But when you have the backing of an expert, why worry?

Taxccount Canada brings you a complete guide on how to pay property tax in Canada. Know how property tax is calculated, who collects property tax in Canada, the different payment methods available, and useful tips.

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Different Property Taxes In Canada

Let’s start with the basics and understand what property taxes are in Canada. They are fixed annual taxes that are charged by local municipalities and not the federal government or the Canada Revenue Agency (CRA).

Property taxes in Canada become the basis to fund essential public services like –

• Schools
• Roads and infrastructure
• Police
• Fire services
• Libraries and parks
• Public transport

If you own a property in Canada, you have to pay property tax. It is based on the value of the property and the local tax rate.

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Who Collects Property Tax In Canada?

It is a misconception that the CRA or the federal government is involved in collecting property taxes in Canada. They don’t have anything to do with it.

Property tax is collected by the local government or municipalities. The amount of property tax that you have to pay depends on the following factors –

• Your municipality
• The assessed value of your property
• Local taxes

Get in touch with the team at Taxccount Canada to get any details about property taxes in Canada and how to file them accurately.

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How Are Property Taxes In Canada Calculated?

Two components are used to calculate property taxes in Canada –

Property Assessment Value

Your property will be assessed by a provincial assessment authority, like –

• MPAC (Ontario)
• BC Assessment (British Columbia)
• Service New Brunswick
• Municipal assessment bodies in Quebec

Keep in mind that the assessed value may differ from the market value.

Municipal Tax Rate

Each municipality sets its own tax rates annually that are based on local budget needs.

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How Do You Pay Property Taxes In Canada?

Canadian citizens have the freedom to pay their property taxes in several ways. The available options mainly depend on your local municipality.

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Direct Payment To The Municipality

Most homeowners pay their property taxes directly to their local municipality. The most common payment methods are –

• Online banking
• Pre-authorized debit (PAD)
• Mail (through cheque)
• In-person payment at municipal offices
• Phone banking (offered only in certain areas)

The municipality will send a property tax bill once or twice a year and will also mention the due date and payment options available.

Follow the deadline, and for any assistance, get in touch with the team at Taxccount Canada.

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Paying Through A Mortgage Lender

Some homeowners choose the option of paying their property taxes through a mortgage lender. This is how it works –

• The lender will estimate the annual property tax
• Monthly tax payments are added to your mortgage payment
• The lender pays the municipality on your behalf

This is a great option if you want budgeting, but it does require constant checks and regular reviews to avoid any under- or overpayment.

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Monthly Or Instalment Payment Plans

Certain municipalities allow property taxes to be paid in monthly instalments. This way, you can manage your budget and don’t have to pay a lump sum.

The main benefits of this method are –

• Easier cash flow management
• You can avoid paying large one-time payments
• Reduces the risk of missing deadlines

You need to sign up in advance with your municipality for enrolment in this monthly instalment program.

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Property Tax Payment Schedules

In Canada, there is no single deadline for property taxes. The dates vary depending on your municipality and generally follow a pattern –

• Annual payment – one-full payment
• Semi-annual payments – two instalments
• Monthly payments – spread through the year for ease of payment

The property tax bill that you receive from your municipality will list the payment deadlines, so keep an eye on it.

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What Happens If You Miss A Payment?

In case you miss a payment, it can lead to penalties and other consequences like –

• Interest charges
• Late penalty
• Tax lien placed on property
• Collection actions
• Property tax sale (in extreme cases)

The interest rate and penalties vary by municipality, but they can add up rather quickly, so it is best to keep up with the payments and not miss the property tax deadline.

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Property Taxes In Canada For New Homeowners

Congratulations for new home in Canada! You might not know that if you have recently purchased a home in Canada, the property taxes are adjusted at closing.

• The seller pays the tax up to the closing date
• The new buyer is responsible after closing
• Adjustments are handled by the notary or your lawyer

Chances are that you may receive the first bill months after your purchase.

If you need any help regarding property tax for a new homeowner in Canada, our team can guide you.

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Property Taxes On Rental And Commercial Properties

Property taxes in Canada apply to –

• Rental properties
• Commercial properties
• Vacant land

There are high chances that these properties have higher tax rates than primary residences, depending on the usage and municipal zone.

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Helpful Tips To Manage Property Taxes In Canada

• Make sure to review your property assessment for accuracy
• Keep a track of due dates and deadlines
• Sign up for automatic payments to not miss a deadline
• Keep property tax bills safe for the records

If you feel that the assessment is too high, you can file an appeal with the assessment authority.