Property taxes are part of the closing adjustments between the buyer and seller in any real estate transaction. The closing adjustments are prepared by your real estate lawyer in the form of a statement of adjustments, and will be part of the paperwork when you meet your lawyer to sign your mortgage documents. Be sure to discuss property taxes while you are with your lawyer when you are signing your mortgage documents.
When you buy your home, your real estate lawyer will do the legwork to make sure all of the seller’s expenses are up-to-date, including their property taxes. If the property taxes for the home you’ve purchased were previously paid through a monthly Tax Instalment Program Plan (TIPP) through the city of Edmonton or it’s neighbouring municipalities, it may be possible to assume the sellers TIPP payments for the property. If your mortgage lender has agreed for you to pay your own property taxes, we recommend you contact your municipality property tax office and arrange to be set up on the monthly TIPP program, rather than having to pay a lump sum every year.
In Alberta, property taxes for the full year are collected on June 30th. If you were to purchase the home between January 1- June 30th (the day of possession is always the responsibility of the seller) the seller would credit you the portion of taxes related to the days they were in the home. If the closing date is between June 30th and December 31st, you would credit the seller for any prepaid taxes.
If you have purchased your home before taxes are due June 30th- be prepared that you will be responsible for paying the property taxes for the remainder of the year on June 30th for July 1-December 31st. This may even be the case if your have requested or are required to have your lender collect and pay your property taxes on your behalf; as you have just begun to contribute to your tax account, your account will not have enough funds to cover the current years property taxes. Every mortgage lender has different policies surrounding the collection and paying of property taxes. With some lenders if you are paying a monthly amount with your mortgage payment to a tax account held with the lender, the lender may upfront the full amount on your behalf but understand there may be an adjustment added to your monthly tax payment to cover the shortfall.
We recommend for you to have an open line of communication with your lender and with your municipality with regards to your property tax bill. Property taxes are a home owners responsibility so please be in contact with your lender/municipality at tax time to confirm your taxes are paid.