🏡 Buying a House? What You Need to Know About Property Taxes

🏡 Understanding Property Taxes When Buying a Home in Alberta — Learn how closing costs, TIPP plans, and reimbursements impact your bottom line.

When you're buying a home, the excitement of closing day can quickly turn into confusion when unexpected fees pop up—especially at the lawyer’s office. One of the most common surprises? 💸 Property taxes. That’s why it’s crucial to understand everything in advance, and this guide—Buying a House? What You Need to Know About Property Taxes—will walk you through the key details so you’re not caught off guard.

📅 Understanding the Property Tax Calendar

Most municipalities in Alberta operate on a property tax year that runs from July 1st to June 30th. That means if you’re buying or selling a home mid-year, someone’s got to cover the remaining taxes—and that’s where things get tricky.

🕵️‍♂️ Ask the Right Questions

Before closing, buyers should always ask sellers:

• How are property taxes currently being paid?

• Is the seller enrolled in the TIPP (Tax Installment Payment Plan)?

• Has the full year of taxes already been paid?

These answers will help you understand what financial responsibilities you’re inheriting.

🏦 How Lenders Handle Property Taxes

If your lender collects property taxes:

• They’ll credit you (the buyer) with the amount paid for the tax year.

• This credit is based on how long the seller lived in the home during the current tax year.

• You’ll need to hold onto that credit or pay it directly to the municipality when taxes are due to avoid a surprise bill later.

🔁 If the Seller Is on TIPP

If the seller is enrolled in the Tax Installment Payment Plan, you can usually just pick up where they left off. Easy peasy! 🙌

You can choose to enroll in TIPP yourself, which spreads your tax payments out over the year—great for budgeting.

⚠️ The Reimbursement Trap

Here’s a scenario that catches many buyers off guard:

If the seller paid the full year’s property taxes upfront, they’ll be reimbursed for the portion of the year they no longer live in the home. But the municipality won’t refund them—so the buyer must pay the seller back at closing.

This can feel like an unexpected bill if you weren’t prepared for it.

🧾 Example Breakdown

Let’s say:

• Total property tax: $4,000

• Tax period: July 1, 2025 – June 30, 2026

• Seller vacated: September 30, 2025

• Buyer occupied: October 1, 2025 – June 30, 2026

📆 Days of Occupancy:

274 days

💰 Daily Tax Rate:

$4,000 ÷ 365 = $10.96/day

🧮 Buyer’s Share:

274 × $10.96 = $3,003.04

✅ So, the buyer should reimburse $3,003.04 to the seller for their portion of the property taxes.

💡 Final Thoughts

Property taxes might not be the most thrilling part of buying a home but understanding how they work can save you thousands—and a whole lot of stress. If you’re unsure how your situation stacks up, reach out. I’m always happy to help you navigate the details and make sure your closing goes smoothly.

📞 Let’s make your homebuying experience as seamless as possible!