Selling a Home: Property Tax Adjustment
September 7th, 2023 by SNJ
Property taxes must be paid on all residential real property as charged by the city, town or municipality in which the property is located. The tax period for all properties is the calendar year, despite the fact that the due dates for the payments of taxes will differ depending on the city, town or municipality rendering the tax bill. It is the usual practice that the owner of the property at the time of the due date of the tax payment will attend to the payment of the tax bill by the due date set by the local government. However, the non-paying party will reimburse the other party for their portion of the tax bill by way of adjustment to the purchase price. It the usual practice of law offices in Manitoba that the seller’s counsel prepare a Statement of Adjustments for review by the buyer’s counsel to ensure that this adjustment is made correctly.
If you have a tax account with your lender who is attending to the payment of the taxes on your behalf, the sale of your property will require you to close out your tax account with that lender. If there are excess funds in the tax account, then the lender will typically apply it against the mortgage pay-out amount, but if the tax account is over-drawn, then the amount owing will be added to the amount of money required to pay-out your mortgage with them.
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