How to Calculate Property Tax
Property taxes are how local municipal governments raise money for services they provide the inhabitants of the locality. Homeowners of a locality are held liable for these tax payments, which depend on the location of the property and its value. Tax rates also vary with the type of property in question; for instance, residential properties are generally taxed less than commercial ones, since the latter are sources of income for owners.
Tenants, who lease their homes, are technically not owners of any property; however, they also pay property tax, which is included in their monthly rental payments. Apart from the physical variables, like location and build, these taxes also vary between different municipalities and provinces. For instance, some regions offer incentives and rebates to low income households, senior citizens and people with disabilities.
Calculation of property tax
Generally, a central agency, in charge of the entire province, carries out a property evaluation after which taxes are decided. Every province in Canada has its own assessment board, which gauges properties and their market values. This assessment is then forwarded to the local municipalities, which then apply the tax rate. These tax rates are usually revised every year, and vary with different types of properties. The yearly property tax is often divided in monthly installments and additional fines can be levied on late payments.
The total tax on a property includes the rate enforced by the municipality as well as the education tax rate. Both these combined are then multiplied with the property’s market value. The educational tax, decided by the provincial government, is collected by the municipality and is used to fund the public schools in the locality.
Contact your municipality and find out the tax rate applicable on properties in your locality. The tax rate is usually applicable in different units, for instance, the tax rate maybe an amount payable on a certain assess value number. You then have to divide the market value of your property with that unit and multiply the answer with the tax rate to find out your total payable property tax.
Property transfer tax is another example of property tax, which is paid when land is transferred. The tax varies from 0.5 to 2% of the property’s value, and with province to province. First-time buyers (first property anywhere in the world) are usually exempted from transfer tax, but they must be Canadian citizens or permanent residents.
