What is the Property Tax Adjustment?

No one likes paying taxes – we get it! However, the seller and the buyer are each responsible to pay property taxes for the period of time that they own the property.

Taxes are calculated from January 1 to December 31 of the calendar year. So, for example, if the property is sold on May 15 then the seller is responsible for the property taxes for the period of January 1 to May 15 and the buyer is responsible for the property taxes for the period of May 16 to December 31.

Municipalities differ on how and when they collect property taxes. Some have monthly plans and others have different dates when taxes are due in full. You should consult the municipality where the property is located to see how best to pay your taxes.

At Fee Simple Law, we request a tax certificate for the property from the municipality. Then, we adjust the taxes owing, right down to the penny, on the closing date to ensure that the buyer and seller each pay the portion of the taxes for which they are responsible.

It is important to note that if you are buying a property and the seller was on a Tax Instalment Pre-Payment Plan (also know as TIPP) then you as the buyer may be responsible for purchasing the tax credit associated with the property from the seller, as municipalities do not refund taxes. Similarly, if there are unpaid taxes in arrears, then the seller will be responsible to pay for those taxes owing on the property before it can be transferred.