Property taxes are the bane of many homeowners’ lives, but they are fundamental to providing local services and creating happy, livable communities that we often take for granted. Admittedly, though, it can be a little baffling to understand how they work. Here’s a guide to property tax, from rates and payment methods to relief programs across Canada.
What are They?
Property taxes are taxes imposed on real estate properties (and their owners) by municipal governments. These taxes are used to fund areas of our day-today lives like snow removal, garbage collection, education, fire departments, community projects, and more.
How are they Calculated?
These taxes are calculated by assessing the value of a property, usually completed by a municipal or provincial property assessment authority. Each municipality – like Toronto or Vancouver – sets its own tax rate. This rate is then applied to the assessed value of the property. The formula used to calculate property tax is assessed value multiplied by the tax rate.
How Often Are They Assessed?
Property assessments are updated periodically and vary by province. Ontario property assessments are updated every 4 years and are done by the Municipal Property Assessment Corporation. In British Columbia, BC Assessment makes an annual assessment. Municipal tax rates can change each year based on what the local government requires.
How Can They Be Paid?
Typically, homeowners will receive notice of a property tax payment that is due by mail. Property owners can pay their property taxes by mail, in-person, or – most commonly – through an online payment system set up by municipalities.
Most municipalities have a preauthorised payment plan so homeowners automatically have payments come out of their bank accounts. There are also options for property owners to pay in installments rather than a lump sum.
Tax Relief Programs
Since property tax can provide a financial strain on homeowners, there are programs created to alleviate the burden. For residents of British Columbia, rebates from The Homeowner Grant can help to cover a significant portion of property tax bills. The Ontario Energy and Property Tax Credit (OEPTC) offers Ontario homeowners an opportunity to claw back a portion of property taxes paid. There are also Toronto-specific programs to help reduce the amount of property tax owed by eligible residents.
What if I Don’t Pay?
Failure to pay property taxes can result in several unpleasant consequences. Most Canadian municipalities will charge interest or penalties, resulting in higher charges over time. This could affect your credit score if property taxes are consistently missed or overdue. You could also face legal implications if property taxes go on being unpaid. Collection agencies may be called after notices have been sent and ignored, and municipalities could even stake a legal claim against the property or initiate a property tax sale to recover the unpaid taxes.
Conclusion
Property taxes can be a confusing subject, but understanding them in your municipality can save you money and anxiety. Stay informed about local tax rates and property assessments and be aware of deadlines when it comes to filing appeals. Be aware that you can ask your local government for advice if you are unsure.
