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How to Deal with Property Tax Bills in Canada

Written by Jessica Steer
If you are a Canadian homeowner, you likely expect your yearly property tax bill. The amount you pay is based on the size and market value of your property, not on the purchase price.
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    That said, while the premise of property taxes is the same, the process is slightly different depending on where you live.

    What are Property Taxes?

    If you own a property in Canada, then you have to pay property taxes. What your property tax rates are will depend on where you live, but they usually sit between 0.5% - 2.5% of the property's market value. This money is paid directly to your municipality and helps fund public services such as fire stations, police stations, garbage collection, public transit, road work and snow removal.

    How to Predict what Your Taxes will Be

    When it comes to figuring out what your property tax payment is going to be, each municipality has their own rate so it's hard to know. What most things are decided by the provincial government, this is determined by the local government. With that in mind, if you go to your local government website, many will have a property tax calculator. Using your property tax account and your estimated property values, it can calculate roughly how much your property taxes may be.

    People like this feature because it helps them determine what they need to save in order to make their property tax payment. It's also calculated based on the current municipal tax rate so it's more accurate.

    How to Pay Them

    Once you receive your property tax notice to your mailing address addressed to the property owner/property owners, there are typically two different ways you can pay them: through your mortgage or directly to the municipality. Either way, there will be a due date on the property tax notice stating when they must be paid by. If you live in a province that has homeowners grants, then those must be filled out by the due date as well to avoid a late payment penalty. You must also pay property taxes (the remittance portion) using Canadian funds.

    Paying in Person

    By making the choice to pay your property taxes to the municipality, it's up to you to be sure that they are paid by the due date to avoid any penalties. Just because you choose this option though, doesn't mean that you have to pay in person. On your property tax bill it will list the different ways that you can pay. These are usually in person, on the phone or online.

    When it comes to paying them in person you have the choice of going to the designated place to pay your property taxes or you can pay them through your financial institution. You can also pay through online banking with your account information, including your account number. You can even set up pre-authorized payments to pay them slowly throughout the year if your municipality offers this. Some local governments even allow you to make your property tax payments via mailed payments using a cheque or money order.

    Paying through your Mortgage

    Another way to pay your property taxes is with your mortgage payments. This means that your mortgage company will make you property tax payments and that amount will be added to your mortgage. They do this by taking the property tax amount and dividing it by 12, then adding it to each monthly payment.

    In some cases, your mortgage lender may require you to pay your property taxes this way. This is usually because you have less than 20% equity in your home or you are a first time home buyer. This is actually protection from the lender because if you default on your taxes, there could be a lien put on your property. It's in the lender's best interest to insure that these taxes are paid.

    Final Thoughts

    No matter what you decide to do, as a homeowner, your property taxes need to be paid. Many local governments do offer flexible payment options so it's important to look into that and see what works best for you. Either way, to avoid penalty, it's best to pay your taxes on time.

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