What exactly are property taxes, though? Well, property taxes are the way local governments raise revenue to pay for things like police stations, fire stations (emergency services), road maintenance, snow removal, and community centres. Really, property taxes are there to fund public services. Even though all property taxes are used for the same purpose, different municipal governments have their own rates.
Calculating Property Taxes in Canada
When it comes to calculating property tax rates in Canada, the process is generally the same, but the rates are different. Essentially, the current value of your property is multiplied by the current tax rate using a unique tax formula to give you the amount you owe in property taxes annually. It’s important to remember that the house prices you pay when you purchase the home aren’t included in the property tax assessment, only the current market value.
Depending on where you live in Canada, you may have other fees added to your property tax bills. Some of these other fees include the education tax and the city building fund. There may also be water and garbage collection fees included in property taxes, since they’re public services. That said, some municipalities will make some of these services optional, depending on where you live.
How The Housing Market Impacts Your Property Taxes
One of the many misconceptions about property taxes is that what you pay is based on what you paid for your house, but that’s not true. The property tax bill given to property owners annually is based on the assessment value of your home. If you just purchased the home, this may also include the land transfer tax.
Even if the city taxes have some of the lowest property tax rates, you still could end up having high property taxes in an expensive real estate market. However, the opposite is true: if you have higher property tax rates and average home prices, you could still have higher property taxes. So, while your property assessment affects your tax payments, similar average property prices can have different tax payments depending on the Canadian cities’ rates.
The Average Property Tax Rate
Property taxes in Canada can range from 0.5% to 2.5%, depending on the municipality and any rate adjustments. That said, property taxes in many major cities range from 0.5% to 1.3%. These cities also happen to have some of the highest housing costs in Canada.
Average Property Taxes in Canadian Cities
How much your property taxes are in Canada is based on what your municipal property taxes are and what your assessed property value is. This is because property taxes are calculated based on these two factors. This is also why property taxes vary so much. In places that have a vacancy tax, these amounts can be even higher.
Ontario
In Ontario, the average property taxes are between $7,000 and $8,000 per year. This is because it’s one of the most expensive provinces in which to purchase a home and has higher property tax rates. However, since these property tax rates vary from municipality to municipality, this amount is only an average.
Toronto
Based on property tax increases and the property’s assessed value, the average property tax amount in Toronto is $7,000. While this is still a lot, these rates are lower than in other places, such as Mississauga. Here, the rates on residential homes can go up to around $8,500. This is wild since both places are in the same province.
Winnipeg
The average property tax amounts also range from $7,000 to $8,000. This is because Winnipeg has a higher property tax rate, even though the cost of purchasing a home there is less than in other parts of Canada.
Property Taxes and Foreigners
In Canada, there are no extra property taxes that you’re required to pay as a foreigner. That said, there is the Non-Resident Speculation Tax. This tax must be paid by foreign buyers at closing when they purchase a home. However, this tax is only required to be paid in Ontario and parts of BC. The rates vary in each province. It’s 20% in BC and 25% in Ontario.
How Often Do You Pay Property Taxes
How often you’re required to pay your property taxes depends on what municipality you live in. Most commonly, property taxes are paid once a year. However, many municipalities will allow you to pay them monthly, semi-annually, or include them with your mortgage.
Usually, the cost of your property taxes will change yearly depending on fluctuations in the property tax rate and the home’s assessed value, which is typically reassessed annually. It’s different everywhere, though. Some provinces, like Ontario, only reassess their property values every 4 years.
How To Pay Your Property Taxes
When you pay your annual taxes, you pay property taxes directly to your municipality. Every year, you’ll receive a bill for your annual property tax. You can then make these property tax payments in full. That said, it isn’t the only way to pay them. You can also set up pre-authorized payments at a more affordable cost and split the required payment. You can also make credit card payments with a credit card payment fee.
Instead of organizing this with the municipality, many homeowners choose to speak with their bank and lump these property tax payments into their monthly mortgage payments for greater relief. These payments are held in a lender tax account or mortgage escrow account. However, you don’t need a high tax rate to do this. Even if you have some of the lowest property prices and a relatively low tax rate, you can set this up for your annual taxes.
1% Property Tax in Canada
The 1% property tax in Canada is also referred to as the Underused Housing Tax. This tax became active in January of 2022 and is an annual federal charge of 1% on all vacant or underused housing. The reason this tax was put in place was to discourage vacant properties and encourage these owners to rent out their properties, since there’s a housing shortage in Canada.
Highest Property Taxes in Canada
The province with the highest property tax rate is Manitoba, with a rate of 2.64%. However, even though the property taxes are higher, the housing prices are significantly lower than in many other cities and provinces. In fact, the average cost of housing in Winnipeg is $350,000, making the average annual property tax just shy of $10,0ar.
Lowest Property Tax Rates in Canada
In Canada, the province with the lowest property taxes is British Columbia, specifically Vancouver. Their property taxes currently sit at 0.27807%. However, even though their property taxes are low, they have some of the highest homeownership costs in the country. The average-priced home in Vancouver is just over $1 million, with the average property tax bill just over $3,000.
Lowest Property Taxes in Canada
While Vancouver, BC, has the lowest property tax rates, Alberta is known for having some of the lowest property taxes. This is because they don’t have sky-high rates, and their housing costs aren’t super high either. This even accounts for affordable property taxes.
Property Taxes Per Province
Now that we’ve looked at the highest and lowest property taxes in the country, how does the rest of the country fit in? Well, let’s take a look.
It’s important to keep in mind that these rates are for residential properties. There are different tax rates for commercial and municipal properties.
| Cities | Property Tax Rate | Average Home Assessed Value | Average Property Tax Cost |
| Vancouver, British Columbia | 0.27807% | $1,188,000 | $3,303 |
| Calgary, Alberta | 0.65718% | $420,507 | $3,661 |
| Regina, Saskatchewan | 1.556501% | $316,100 | $4,920 |
| Montreal, Quebec | 0.5305% | $519,200 | $2,754 |
| Winnipeg, Manitoba | 2.6439% | $344,600 | $9,111 |
| Fredericton, New Brunswick | 1.62% | $280,400 | $5,061 |
| Toronto, Ontario | 0.666274% | $1,196,101 | $7,969 |
| St. John’s, Newfoundland and Labrador | 0.83% | $312,399 | $2,997 |
| Charlottetown, Prince Edward Island | 1.67% | $339,000 | $5,661 |
| Halifax, Nova Scotia | 1.154% | $400,500 | $4,622 |
As you can see by looking at these numbers above, there’s really no correlation between the property tax rate and the housing value. Ravary by each province, each local government.
In fact, if you look closely, you’ll notice that the Prairies and the Atlantic Coast tend to have higher property tax rates. As you can see, the lowest rate is in BC, but that doesn’t stop in Vancouver. In fact, Abbotsford, Kelowna and Victoria actually have low property tax rates. They’re among the lowest in the country.
- Abbotsford has a tax rate of 0.37086%
- Kelowna has a tax rate of 0.39799%
- Victoria has a tax rate of 0.43621%
The average home price in these 3 cities ranges from $ 1 million to $ 8,800,000, making the average property tax between $3,000 and $4,000 annually.
Predicting Your Annual Property Taxes
While we’ve gone over the average cost of property taxes in Canada, this still doesn’t narrow down what your individual property taxes will be. The easiest way to determine your property tax bill is nd use the property tax calculator available on your municipality’s website, based on your housing assessment. This will give you a rough idea of how much you’ll owe.
While this is just an estimate, it’s close to the actual amount to help you predict what you’ll owe. Because property tax rates can fluctuate annually, many Canadians spread the cost of their property taxes throughout the year to make it more affordable.
For some, a large annual bill isn’t always feasible. This is all the reason why some people lump it in with their mortgage payments. However, every year, a few residents who don’t pay their Canadian property taxes incur late fees.
Penalties For Not Paying Your Property Taxes
While the penalties for not paying your property taxes vary by municipality or province, there are commonalities. The first is that as soon as you miss your payment, there is an automatic penalty. From there, interest is added monthly until the taxes are paid.
In Canada, your property taxes can remain unpaid for a while. That said, once they’ve been unpaid for three years. Then you need to worry. Now the municipality can sell your home to cover the unpaid taxes. For this reason, it makes the most sense to come up with a payment plan to catch up on your taxes.
How Property Values and Property Taxes Correlate
When you’re purchasing a home, there are a few things you should consider about property taxes. This is because residential property taxes are based on property value, not the purchase price.
- Comparing property tax rates is important. This is one of the most important pieces about property tax revenue.
- The property market’s value over the years and predicted changes in the market can provide a lot of information. This can help you determine your average property tax amount.
- The property type makes a large difference and affects your property tax rates.
- High property values and low property values can affect the tax rates in your area.
- How property taxes are affected differently in rural areas versus ur areasban.
- Often, there are other annpayable beds to the municipality in addition to the city tax rates.
In Canada, property taxes have nothing to do with federal income tax rates. These are rates specific to municipalities that fund essential local services, such as fire departments and other vital service pr,oviders at all service levels. Since these rates vary significantly, it’s important to consider all aspects of these tests and not just the rate itself.
How Do You Appeal a Property Assessment?
If you aren’t happy with your assessment through service providers like BC Assessment, then you’re appealing. To do this, though, there are some steps you need to take.
First, you want to call BC Assessment Order to discuss your BC Assessment Notice. If you’re in Ontario, you can send a message to the MPAC Assessment (Municipal Property Assessment Corporation) to appeal. Often, the errors can be fixed with a quick conversation without filing an appeal. If that doesn’t work, though, then you can begin the assessment appeal process.
This starts by filing a complaint with the Property Assessment Review Panel. Once that’s done, you attend a short 30-minute hearing and provide any necessary market evidence. If you then disagree with their decision, you can submit a request for reconsideration with the Property Assessment Appeal Board.
Are Seniors Able to Defer Their Property Taxes?
If you’re a senior in some provinces in Canada, you’re able to be part of the property tax deferral program that is provided through government-backed low-interest loans. It works by the government paying the property taxes owed to the municipality. This particular one acts as a home equity loan and is paid off when the home is sold or transferred, or when the owner passes away.
How Supplementary Tax Bills Work
In Canada, a supplementary tax bill is an extra tax bill that is assessed after the regular tax bill when the property’s value has increased. This is also often known as a property tax adjustment. commonly happens when new construction is built, major home improvements are made, or property changes occur.
Who Pays Property Taxes on Closing Day?
When a house is sold, the property tax cost is split between the buyer and the seller based on the transfer of ownership. The split is as follows: the seller pays for the portion of the year up to the day before closing, and the buyer pays for all the days after the closing.
The exact amounts are given on a statement of adjustments. That said, even though this is a mandatory cost, it isn’t included in your mortgage qualifications or the borrowing capacity for your mortgage affordability. Once it’s paid, though, you will get your tax certificate at closing.
The Deductibility of Property Taxes on a Rental Property
In Canada, you can deduct your property taxes paid on rental property. However, you can only do this for the period during which it was rented or made available for rent. This is different from disability property relief and low-income tax rebates. This specific deduction is part of your rental income deductions and can be claimed along with any capital cost allowance you may be eligible for.
How Does a Municipal Tax Sale Work?
Municipal tax sales are a way of collecting municipal taxes that are owed. However, the municipal tax sale process only happens once you’re two to three years behind on your property taxes. That’s what’s owing when it goes to sale; it will include any interest on arrears, and you will have a specified redemption period after the government registers a tax arrears certificate or a proposal to pay the amount owing to stop the sale.
How the sale actually runs is up to the municipality. It’s normally advertised, and they have the choice between a public auction or a public tender system using secret bids.
How BC Homeowners Grants Work
In BC, you have receive the ability to apply for a homeowners’ grant when you pay your property taxes. However, the discount you may receive doesn’t impact your municipal tax rate but your total property tax amount. To qualify, though, you must have a principal residence designation, as it can’t be claimed on rental property.
Your actual property tax amount is determined based on your property value by the assessment authority and what they determine on your annual assessment notices. In BC, this is BC Assessment. It’s done for all properties, including those with high assessed values and those with industrial uses.
Using this amount and the municipal tax rate, you’ll receive your bill with the property taxes calculated, as well as the property tax estimates if you claim the BC Home Owners Grant. If you do claim, you have two choices. You can claim the seniors designation for your seniors home owners grant, or you can claim just the principal residence designation.
That said, it’s important to note that your property taxes could be calculated much differently if you have farm property classification, have a home business, or a reserve land exemption. In fact, British Columbia offers additional exemptions for different tax-class categories.
Property Taxes in the Territories
Property taxes in the territories are calculated using a mill rate set by the government. The amount for territorial property taxes essentially equals the assessed value of the land multiplied by the mill rate.
Extra Levies on Property Taxes
When it comes to property taxes in Canada, there are many different costs to consider. These are different from the provincial land transfer tax and the municipal land transfer tax, which are charged when you first purchase a home and can be waived for first-time home buyers.
Some of these other fees that you may find on your property taxes include:
- Waste collection levy
- Stormwater fee
- Business improvement area levy
- Local improvement charges
- Development charges
- Education portion for public schools
- Residential rate
- Assessment authority fees
- Public transit levies
- Municipal portion to support city services
In most municipalities and major Canadian cities, homeowners are required to pay property taxes. While these cities are revenue-neutral, they do receive funding from tax revenue to support essential public services, fire protection, and more.
Whether you have low property values, higher average property values, or commercial and industrial property, you need to pay taxes. However, it will determine how much tax you pay. Each property class will have a different fee, but all will include amounts to help cover municipal services.
Vacancy Taxes on Empty Homes
The Speculation and Vacancy Tax is mainly in BC and is a provincial tax that targets properties left empty. The rate is currently 0.5% and will increase to 1% in 2027. The declaration is completed annually by March 31 and is often referred to as the empty homes tax.
In Toronto, there is also the Vacant Home Tax. This tax is levied at 3% of the home’s value and is only charged to homes that have been vacant for 6 months or longer without a valid exemption.
How Do Property Taxes Work on Cottages and Vacant Land?
How these property taxes are done is based on where you live. Every municipality may offer different property tax rates, ranging from cottage country rates to vacant land taxes. Some places even have recreational property taxes. When it comes to vacant land, though, there’s also a new land assessment timeline that can impact your property taxes.
Overview
No matter where you choose to live and purchase a home in Canada, it’s important to consider not only the housing prices and cost of living but also the property tax rates. As you can see, the costs and property taxes are low. In fact, it seems that those who have lower assessed home values actually pay a bit more in property taxes.
While property taxes can be quite expensive, they’re actually quite necessary to fund public services. These public services are necessary to keep communities running smoothly.
