Property tax is a recurring fee municipal governments collect from homeowners. Property tax rates vary by community and are based on assessments of the market value of land or a building, often a residential home.
How property tax works
If you own any type of real estate in Canada you are required to pay property taxes directly to the municipal government.
Property taxes are one way that local governments generate revenue. They are collected by local governments from residential, commercial and industrial property owners.
Local governments use funds from property taxes to pay for a range of public services in the community, including police and fire stations, schools, roads, garbage collection, snow removal and sewers.
Details, such as how often they are due, vary by municipality. Payments might be made annually, semi-annually or quarterly. Your property tax bill may include a breakdown of where your money is going. For example, in Toronto, the overall property tax includes three different fees:
- City tax.
- Education tax.
- City building fund.
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Canadian property tax rates
Individual property tax amounts are calculated using your home’s value and the municipal property tax rate. Government-authorized entities typically assess home values on a regular basis, but the frequency of those assessments varies by province. In Ontario, for example, assessments are carried out once every four years; in Alberta they happen every year.
Every municipality across Canada determines its own annual property tax rate; contact your municipality or visit its website to see your current rates.
Typically, property tax rates range from 0.5% to 2.5%. The size of your property, what you paid for it, and your income play no role in how much you will pay in property taxes.
Examples of some 2023 municipal property tax rates in Canada:
| City | 2023 Residential Tax Rate |
|---|---|
| Toronto Kitchener | 0.63% 1.21% |
| Vancouver Victoria | 0.28% 0.44% |
| Montreal | 0.63% |
| Calgary Edmonton | 0.66% 0.94% |
| Saskatoon | 1.29% |
| Winnipeg | 2.64% |
| Halifax | 1.12% |
| Fredericton | 2.53% |
| Charlottetown | 1.67% |
| St. John's | 0.83% |
Calculating your property taxes is fairly straightforward. If you have a home in Ottawa, for example, and its market value is $500,000, you would multiply $500,000 by the current residential tax rate (1.14%) to get $5,700, which is approximately how much you would have to pay in property taxes for the year.
Nerdy Tip: For the most current information about tax rates in your province, territory or city, consult your local government website. Some of the examples above exclude additional rates, such as neighborhood-specific taxes, you may be subject to.
How to pay your property taxes
How often you have to pay property taxes will vary by municipality. When it comes to actually paying those taxes, you will typically have two options.
Pay the municipality directly
If you pay the municipality directly, it becomes your responsibility to pay your property taxes on time. You will receive a property tax bill by mail and will typically have the option to pay by phone, mail or online. You may also be able to set up pre-authorized payments with your financial institution.
Pay your property taxes through your mortgage
If you pay your property taxes through your mortgage, your lender makes the required payment on your behalf and then adds a fee to your mortgage payments. To do this, your lender will take the annual property tax owed, divide it by 12, and add that amount to your monthly mortgage payments.
In some situations, homeowners have no choice but to combine their property taxes with their mortgage. For example, this may happen if you are a first-time homebuyer.
In these instances, the mortgage lender will most often require that you include the property taxes with your mortgage as a form of protection on their behalf. Lenders want to ensure that you don’t default on property taxes, which could result in a lien against your home.
If you can’t pay your property taxes
If you are having difficulty paying your property taxes, get in touch with your local government. You may be able to set up partial payments or come up with an alternate payment schedule.
Be sure to reach out for help sooner rather than later. If your property tax payments become significantly delinquent, the province could initiate collection actions, which could negatively affect your credit rating.
About the Authors
Kurt Woock
Kurt Woock started writing for NerdWallet in 2021. Prior to joining NerdWallet, Kurt was a writer and educator for Colorado PERA, a retirement system for public employees. Before that he…
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Hannah Logan
Hannah Logan is a freelance writer and blogger who specializes in personal finance and travel. You can follow her personal travel blog EatSleepBreatheTravel.com or find her on Instagram @hannahlogan21.
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I'm Kurt Woock, a writer and educator with a focus on personal finance. I have been contributing to NerdWallet since 2021, and my background includes experience with Colorado PERA, a retirement system for public employees. I've delved into topics related to property taxes and their implications, showcasing a comprehensive understanding of how these taxes work, their significance in local government revenue generation, and the intricacies of property tax rates across various municipalities in Canada.
Property tax is a recurring fee collected by municipal governments from homeowners based on assessments of the market value of land or buildings. The revenue generated from property taxes funds essential public services such as police and fire stations, schools, roads, garbage collection, snow removal, and sewers.
Understanding property tax rates is crucial, as they vary by municipality and are determined by assessing the market value of properties. In Canada, assessments are carried out at different frequencies depending on the province, ranging from once every four years in Ontario to annually in Alberta. Property tax rates typically range from 0.5% to 2.5%. The size of the property, purchase price, and income do not directly influence the amount paid in property taxes.
To calculate property taxes, homeowners can multiply the assessed property value by the municipal property tax rate. For instance, if a home in Ottawa has a market value of $500,000 and the residential tax rate is 1.14%, the property taxes for the year would be approximately $5,700.
Payment frequency varies by municipality, and homeowners can either pay the municipality directly or through their mortgage. When paid through the mortgage, the lender makes the required payment on the homeowner's behalf and adds a fee to monthly mortgage payments.
In cases of financial difficulty, homeowners struggling to pay property taxes should contact their local government for potential solutions, such as partial payments or alternative schedules. Delayed payments could lead to collection actions by the province, negatively impacting credit ratings.
For the most up-to-date information on tax rates and regulations in your province or city, consulting your local government website is recommended. Understanding property taxes is crucial for homeowners, as they play a vital role in local community development and service provision.
In conclusion, my expertise lies in breaking down complex financial topics, such as property taxes, and providing practical information to help individuals navigate these aspects of homeownership.
