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Monday August 20, 2018

Intro to Property Tax Adjustment

Authored by: Lauren M. Randall Posted in: Real Estate

When purchasing or selling a property, there will always be a property tax adjustment unless agreed otherwise.  Property taxes are set and collected by the respective municipalities, so the collection dates will vary throughout the province.

In HRM, the property tax year runs from April 1 to March 31.  Each property owner is billed twice a year, in April and October, and each payment prepays for the following six months. This means the April tax bill covers from April 1 to September 30 and the October bill covers October 1 to March 31.

If the current owner has paid their taxes, the purchaser will be responsible to reimburse them for the portion of the tax period that has been prepaid, which applies to the time the purchaser will own the property.  For example, if a property owner pays their taxes in full in April and then closes the sale of that property on April 30, the purchaser will have to pay to the seller on closing 5 months’ worth of taxes, May 1 to September 30. 

If on the other hand, the current owner has not paid their taxes, they will give the purchaser a credit for the amount of taxes that applies to the time they have owned the property.  For example, if a property owner has not paid any of their taxes and closes the sale of a property on April 30, the seller will give the purchaser 1 months’ worth of taxes and the purchaser will be responsible to bring in the additional 5 months’ worth of taxes to send to the municipality.

In both above scenarios, the responsibility of the purchaser is the same, the difference is where the money is being sent, either to the seller or the municipality.

If you’re in need of further clarification concerning property tax adjustments one of our experienced Real Estate lawyers would be happy to help.  

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