Why is TD no longer paying property taxes?

Many Canadian lenders, including TD, offered an optional service with some mortgages wherein they would collect a part of your property taxes with your regular mortgage payments and then pay your municipal property taxes directly once they were due. This was most common with high-ratio mortgages (where the down payment is less than 20%), as municipalities have tax liens that take priority over mortgage lenders in case the taxes go unpaid.

However, in 2024 – 2025, there was a change that happened which not many customers are aware of. TD began notifying homeowners that, from now on, it would no longer collect and remit property taxes on their behalf. Many borrowers received letters showing –

• A refund of the property tax funds that had previously been collected in escrow.
• A notice stating that property taxes need to be paid directly by the homeowner to their municipality.

This change means that TD will no longer hold the tax funds in a separate account and pay property taxes for you. You are now responsible for paying your own municipal property taxes as per the deadline.

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Why Did TD Stop Paying Property Taxes?

Although there is no official statement from TD that explains this change, based on customer reports, here are several practical reasons –

The Service Is Less Necessary Today

In the past, many municipalities didn’t have the option of modern payment, which made it easier for banks to step in and handle the tax payments. However, today most cities and towns in Canada have –

• Online payment portals
• Pre-authorized monthly debit plans
• Automatic billing through banking apps

This reduces the usefulness of banks in making the property tax payment on behalf of the homeowner, as homeowners can now make and manage the payments directly with the municipalities.

It Is an Administrative Burden With Very Few Benefits

Tax collection from thousands of mortgage customers and then ensuring that those funds are accurately tracked and remitted is a time-consuming and cumbersome task. It turns out to be an administrative burden and the banks must –

• Maintain separate escrow accounts
• Monitor changing municipal tax deadlines and amounts
• Reconcile municipal receipts with customer accounts

For a lot of lenders, including TD, this operational and staffing cost turns out to be way more than the value, especially if the bank is not earning interest on the escrow funds.

Historical Reasons Are No Longer Applicable

Bank property tax payment services were considered valuable when –

• Municipal online systems did not exist
• Homeowners had limited ways to manage their property tax payments
• Lenders needed to protect their security position

Today, none of these conditions is applicable. And with the evolving banking technology, it is so easy for individuals to set up automated payments as per their convenience.

It Is Not a Revenue Strategy

There were online speculations, including concerns that this change made it easier for the banks to initiate foreclosures. But there is no evidence that TD discontinued this service as a profit or foreclosure strategy.

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What Does It Mean for Homeowners Now?

If you have also received a letter from TD saying that they will no longer pay your property tax, then here’s what you need to know.

You Need to Pay Municipal Property Taxes on Your Own Now

Homeowners need to –

• Pay the property tax bill directly to the city or the municipality
• Keep the receipts or proof of payment (in case there is any dispute)

If you miss a payment, it may result in penalties, and in extreme cases, your municipality could also place a lien on your property.

To pay your property tax on time and not miss a deadline, you can get professional tax planning services from Taxccount Canada.

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Double-Check Your Mortgage Documents

When you took out your mortgage, you must have signed a contract stating that TD will handle your property tax remittance. In most cases, banks have the legal right to change this service. But it is advisable that you review your agreement and the letter that the bank sent you to understand your legal rights and obligations.

If you feel you cannot understand it, get in touch with an expert, like Taxccount Canada.

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Set Up Your Own Payment Plan

Municipalities offer various ways in which you can pay your property tax –

• Pre-authorized monthly payments to spread out the amount
• Two or more instalment payments per year
• Online payment through your bank or the city’s portal
• Payments through your banking app

Setting up a plan helps you avoid last-minute hassles and a year-end lump-sum payment.

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Tips for Managing the Transition

Follow these tips –

• Create a separate savings strategy
  It would be beneficial to consider setting a small amount aside each month in a dedicated ‘property tax’ savings account.
• Automate the payments
  Many municipalities let you set up automatic payments on the same day as your pay cheque arrives.
• Keep a track of deadlines
  Property tax due dates may vary depending on the municipality and province. Visit your city’s tax office website to know the deadlines and penalty information.

Discontinuation of property tax payments by TD may be an inconvenience, but it is largely due to a shift to modern payment methods rather than being a sign of financial instability. Plan the payments with your tax consultant and keep track of deadlines.

This is general information only and not professional advice. Consult a professional before acting.