Property Taxes In Canada – Forbes Advisor Canada – Forbes

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Each municipality will have slightly different ways of calculating property taxes, but there is a basic formula underlying it all that is used across Canada to determine your property tax amount:

Property Tax = Assessment Value x Municipal Tax Rate

Beyond this basic formula, each municipality and each province may have their own rules, regulations and procedures for assessing the value of your home. For instance, Alberta uses three different approaches when assessing typical residential properties:


Buy/sell, rent/lease residential &
commercials real estate properties.

  • Sales Comparison Approach: The municipality reviews sales of homes in the area that have similar characteristics and uses that data to determine a value of the home they are assessing.
  • Cost Approach: Municipalities measure the market value of the land the property is on, plus the cost of improvements, less the improvement depreciation (loss in value for improvements) of the property. This approach is typically used when there are few comparable properties in the area.
  • Income Approach: The municipality estimates what a purchaser would pay for a property based on its income-producing potential, such as how much it would earn as a rental property.

Toronto’s property assessment corporation looks for comparable sales in the area and reviews at least five different factors when assessing a property, including:

  • Location
  • Exterior square footage
  • Lot dimensions
  • Construction quality
  • Age of the building (taking into account renovations)

When setting its tax rate, a municipality looks at a number of different factors and data points, usually based on the municipality’s budget and goals. However, since municipalities rely on property taxes for a large portion of their revenue, the more needs a municipality has or the more municipal services it provides, the higher its tax rate, generally.

Keep in mind, your property tax bill might also include a number of other fees, such as city services or education taxes, which are bundled together under one invoice.

How Often Do You Pay Property Taxes in Canada?

Generally, property taxes are paid annually. That said, each municipality sets their own procedures for payment, with some allowing property owners to pay their taxes monthly or even semi-annually.

Do Foreigners Have to Pay More Property Taxes in Canada?

On paper, foreign property owners in Canada are not required to pay additional property taxes in Canada. There is, however, an Underused Housing Tax that does apply a 1% tax to vacant or underused housing in Canada. This tax may be applicable to some foreign property owners who don’t use their Canadian property as a primary residence.

In addition, foreigners that purchase properties in certain provinces such as British Columbia or Ontario, will pay a Non-Resident Speculation Tax upon purchasing a home in these jurisdictions. The rate of this tax varies per province, but is around 20% or greater.

What is the 1% Property Tax in Canada?

The Underused Housing Tax (UHT) was implemented on January 1, 2022, requiring many foreign or non-national property owners, and some Canadians, to pay an additional 1% tax on any underused or vacant property they own, so long as they do not meet any exemptions. The point of this federal tax was to apply additional fees to owners of homes that were either vacant or underused in an effort to encourage them to rent these properties out or sell them to people planning to live in them, as a means of improving the available supply in Canada’s housing market.

Generally speaking, the UHT applies to property that is:

  • Residential
  • Owned by a foreign national
  • Owned by a partnership of a Canadian resident
  • Not used as a primary residence
  • Does not have an occupant for at least 180 days of the year

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