You've consulted your finances and you've discovered that you can afford to buy one of those fine properties you've had your eye on for so long. Before you go ahead with the purchase process, however, make sure you're taking into account not just the anticipated lump sum but also your yearly property taxes, which will likely amount to several thousand dollars. This article should help you familiarize yourself with property taxes and figure out how much you can expect to pay.
What is property tax?
Property tax is how the city of Toronto gets money to do things like build new subway lines or clean up city parks. Some money for public works projects and city services like trash collection and sewers comes from loans and investments but most of it comes from charging real estate owners a fee for the privilege of owning property in the city. Property taxes are one aspect of the municipal tax structure. Others include the Personal Vehicle Tax and the Municipal Land Transfer Tax.
When do I pay taxes?
Property taxes in Toronto are collected in two installments. You get a bill from the city for the amount of your taxes in both cases to remind you to pay and how much to pay. Your first bill, called the Interim Bill, comes in January, and the second one, called the Final Bill, comes in June. Bills can be paid in 2, 3, 6, or 11 installments. A person might choose to align tax payments with lease payments or use pre authorized payments. Failure to pay taxes on time results in 1.25% per month in interest and eventually with the city taking possession of your house.
Relief and Rebates
It is possible to get breaks and rebates on your taxes in Toronto. Low income earners (especially seniors living on fixed incomes) and disabled persons are able to apply for relief, deferral or even cancellation of taxes and water bills if they can demonstrate their inability to pay at the current rates. Tax rebates can be collected by owners of vacant industrial buildings and charities. If, for instance, you ran a driving course in Toronto that gave free lessons to immigrant workers, you could save 40% on the taxes for your offices. If you are interested, ask about an HST rebate with the experts at Rental Rebate.
How much do I pay?
Unfortunately the taxes on a property are not listed on the MLS listing. A municipal tax assessor inspects the property every four years and judges its worth based on market value for a certain date in the past. The last assessment was done in 2008. You will receive a notice before the next assessment occurs. The tax rate is about .85%, so on a $400,000 property you would pay about $3,400.