Buying a Home: Property Taxes
July 23rd, 2014 by SNJ
In a typical real estate purchase, an adjustment is usually made to the purchase price with respect to property taxes. This is due to the fact that property taxes are paid at different times of the year in the various areas of the province, but regardless of which area of the province the property is in, property taxes are always paid for the current calendar year. Therefore, depending on whether taxes have been paid for the current calendar year or whether they remain unpaid either the seller of the home may need to be reimbursed for any prepaid taxes, or the purchaser may need to be compensated by the seller if taxes have not yet been paid for the current calendar year.
The “rule of thumb” is that as a buyer, you will only be responsible for paying property taxes from the date of possession to the end of the calendar year, and your lawyer will explain to you how the adjustment was made to the purchase price to reflect that fact.
The exception to the general rule is if the parties have agreed to adjust property taxes on some other date than the possession date or not to adjust property taxes at all. For example, with respect to farmland transaction, the agreement between the parties may state that the party who will be benefiting from the harvest from the land will pay property taxes for the entire calendar year.
Notice: The articles on our website are provided for general information purposes only and should not be relied upon as legal advice or opinion. They reflect the current state of the law as at the date of posting on the website, and are subject to change without notice. If you require legal advice or opinion, we would be pleased to provide you with our assistance on any of the issues raised in these articles.
