When buying a home in Canada, prospective homeowners must learn all they can about property taxes to move forward with confidence. Knowing just what to expect when it comes to property taxes can help these home buyers avoid surprise expenses and other pitfalls. Canadian home buyers can get started by using this guide to better understand property taxes.
Tax Rates Vary Across the Country
Homeowners are subject to the tax rate assigned to the city where they buy their residence. This tax rate varies considerably across the nation. In areas with a high tax rate, such as Winnipeg, homeowners can expect to pay $12 on every $1,000 of their home's value. At the lowest end, however, homeowners only have to pay $2.50 per $1,000, as found in Vancouver.
Home Value Assessments Matter, Too
The Canadian regional tax rate applies to the value of each property to find the amount owed by the homeowner. As the value of the property increases, so do the tax totals for that location. During the initial purchase of the home, buyers must cover a one-time transfer fee for the property tax account. This fee applies to the value of the property as a percentage.
Most Taxes Come Out of the Mortgage Payment
After paying the initial fee, Spruce Avenue homeowners must pay their property taxes on an annual basis. To keep them from having to make a lump sum, mortgage companies open an escrow account and tuck away the funds on a monthly basis. Homeowners pay into this fund through their mortgage until it reaches the total amount owed.
Other Ways to Pay Exist as Well
Canadian homeowners have other ways to pay their property taxes each year if they prefer. They can elect to pay additional funds into the escrow account to cover the tax payment faster, for example. They can also send in a lump sum payment to cover it in full and reduce their monthly mortgage payment.
Through a deeper understanding of the basics of property taxes in Canada, prospective homeowners have the information they need to move through their purchase journey with ease. Their diligence in learning the ins and outs of the process will continue to benefit them greatly in the years to come.
By Justin Havre