If you are a property-owner, you must pay an annual tax to the municipality in which your property is located. The purpose of paying annual property taxes is to fund local services, infrastructure and improvements, as well as other service-based organizations like hospitals, transit and schools. Property taxes are determined annually by each municipality and are based on a mill rate, which determines the amount of tax payable per thousand-dollars of a property’s value, as determined by BC Assessment.
Some property owners may be entitled to claim a home owner grant (HOG) in order to reduce their property tax bill, based on certain eligibility requirements. Most commonly, the basic or regular HOG is claimed by a registered owner of a property who is a Canadian citizen or permanent resident and lives in the property as their principal residence. The basic HOG usually reduces your property taxes by $570, but can differ depending on the property’s assessed value and municipality. The additional HOG, usually valued at $845, is commonly claimed by seniors (aged 65+), veterans or persons with disabilities. Even if there are multiple eligible owners, only one HOG can be claimed per property each year and owners can only be considered to have one principal residence each year (so if you own multiple properties, you can’t claim a HOG on all your properties in the same year).
In some cases, it is possible to enter into an agreement to defer payment of your property taxes. This means that eligible owners (persons aged 55+, a surviving spouse of any age, or persons with a disability) may postpone payment of the taxes indefinitely and that their tax account will not be considered to be “in arrears”; nominal interest accrues on deferred tax balances each year and the entire deferred amount of taxes is paid when the property title is transferred or sold. (Note: if you have a mortgage or secured LOC on your property, you should check with your bank/lender before applying to defer your property taxes because it is commonly a contravention of your mortgage agreement to defer your property taxes).
Timelines:
- January: BC Assessment notices are mailed to property owners. If you want to appeal your assessed value, you must do so by January 31st.
- May – June: property tax notices are mailed to property owners.
- July: payment/ HOG is due on the 1st business day of July. The very next day, property tax accounts with an outstanding balance are levied a 5% penalty. Note: July payment represents the property tax levy for the entire calendar year (January to December). (Note: Vancouver properties pay an “Advance Levy” in February and then the remainder of the property taxes in July).
- September 1st: deadline to claim an outstanding HOG and pay your outstanding balance. Accounts with a balance as at September 2nd are assessed an additional penalty of 5%. **Property tax accounts that have outstanding balance after December 31st become delinquent. Accounts that have been delinquent for 2+ years may be pushed into foreclosure.
Unlike provincial Speculation and Vacancy Taxes, which “run with the person,” property tax accounts “run with the land.” This means that each property is billed, so if there is more than one owner of that property, only one of the owners needs to ensure the tax balance is paid in full. It also means that if you are buying property, you’ll want to make sure that all past years’ property taxes have been paid because arrears do not follow the seller, but, instead, they remain with the property and become the responsibility of the new owner to pay.
Tip: As your Notary Public, we will ensure that property taxes are paid in full (no arrears) when handling your real estate purchase or sale. We will also pro-rate and reallocate property tax on the statement of adjustments to ensure an equitable division of cost per day between a buyer and seller.
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A NOTE FOR THOSE MOVING IN JUNE
There is often confusion amongst buyers and sellers who move in June. People commonly wonder: “Should I pay the full property taxes if I’m moving before taxes are due in July? Should I claim my HOG on my sale property or my purchase property? How do I obtain the tax notice if I just moved into my new place and didn’t receive a tax notice from the municipality?”
Don’t worry. If you have questions, just give us call – we can guide you!
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