Property Taxes in Canada
For a lot of first time homebuyers understanding how property taxes work in Canada can be intimidating. Some questions one might have could simply be; where is my money going? Some of the revenue that’s collected via property taxes goes toward both the municipal and provincial governments. But understanding exactly where that money is going is an important part of homeownership. RE/MAX Canada recently shared a great article about this very topic and have explained the process in an easy to understand way.
“Property taxes are mandatory annual payments that owners of real estate property, such as land, houses, or commercial buildings, must pay to their municipal or provincial government. Serving as a primary source of revenue for these governments, property taxes play a crucial role in financing critical community services and infrastructure. These can include schools, libraries, parks, road maintenance, public transportation, emergency services, and many more amenities that help maintain the quality of life within a community.” — RE/MAX Canada
It’s important to learn about how these taxes work in order to be a responsible homeowner. In this blog post, we’ll go over why it’s important to understand and why you should consider what the property taxes would be when creating a budget.
Municipal and Provincial Taxes – How They are Calculated?
It makes sense that property taxes would vary depending on the municipality and province that you’re residing in. Each city has its own way of assessing taxes and what they’ll go toward. This assessment is managed by each province’s assessment body and is based on each property’s location, if it’s had improvements or renovations, the age of the property and the size.
Then we have municipal tax rates to consider as well, local municipalities determine the property tax based on its value at the time. According to RE/MAX Canada, this is done by mills; “one mill equals $1 in property tax levied per $1,000 of a property’s assessed value.” These rates can vary depending on the municipality of course.
“The formula to calculate the property tax is Property Tax = Property Value Assessment x Municipal Tax Rate. For example, if a home is valued at $500,000 and the municipal tax rate is 0.5%, the homeowner would owe $2,500 in property taxes for the year.” – RE/MAX Canada
We recommend doing some research or asking your REALTOR to help you better understand how these taxes are calculated. This again, is an important part of setting your budget before you go out and view listings. Let’s now look at how taxes may vary form province to province.
Taxes May Vary Province to Province
Now that we understand how property taxes are calculated, let’s look at how they are assessed on the provincial level and how they work. Since each province has its own ways to determine their property taxes, understanding how it works is another important part of the new homeownership process.
In the report by RE/MAX Canada, they explained it as follows; each province has its own way to calculate and assess property values – so it only makes sense to research what your province’s taxes are and how that will affect your monthly budget. Since these taxes are an important part of the provinces revenue, the municipalities as well in fact, it means the taxes themselves can vary a great deal from province to province. This can also be determined by the real estate market at the time as well.
“The real estate market conditions can differ significantly between provinces, affecting average property values. Provinces with higher average property values might generate more tax revenue even with lower tax rates, while provinces with lower average property values might need higher tax rates to generate the necessary revenue.” – RE/MAX Canada
Learning more about your provinces property taxes and your municipality property taxes are such an important step, as we mentioned previously. Now that you have a better understanding of how they are calculated and assessed you can start to consider your budget for your new home and you can find out what the property taxes are in your area. Contacting an experienced real estate agent can help make this entire process easier, since they are knowledgeable and have experience with this.
Contact the VanDinther Team
Contacting the VanDinther Team will be well worth it, they are a team of highly knowledgeable and experienced real estate professionals. This means that you can rely on their ability to help you find the home you’ve been looking for and help you to stay within your budget.
Do you have any questions or concerns about the real estate market or are looking to list your property? Please feel free to contact the VanDinther Team today, they can be reached by phone at 905-330-2002 or by email at firstname.lastname@example.org. The VanDinther Team looks forward to helping you make the right moves.