What happens to property taxes when a property is sold mid-year in most Canadian provinces?
Correct Answer
B) Taxes are prorated between buyer and seller by possession date
Property taxes are typically prorated (divided proportionally) between the seller and buyer based on the possession date. The seller is responsible for taxes up to the possession date, and the buyer assumes responsibility from that date forward.
Why This Is the Correct Answer
Property tax proration is the standard practice across most Canadian provinces when a property changes ownership mid-year. The possession date serves as the dividing line - the seller pays taxes for the period they owned the property, and the buyer assumes responsibility from the possession date forward. This ensures fair allocation of tax liability based on actual ownership periods and is typically calculated on a daily basis for precision.
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More Real Estate Taxation Questions
In Alberta, property taxes are primarily used to fund which level of government services?
Does Alberta charge a provincial land transfer tax when purchasing real estate?
In Ontario, who is responsible for paying the land transfer tax when a property is purchased?
A Toronto resident owns two properties: their principal residence worth $800,000 (purchased for $400,000) and a cottage worth $500,000 (purchased for $300,000). If they sell both properties in the same year, what is their total taxable capital gain?
What is the primary purpose of municipal property taxes in Canada?
- → In Ontario, what is the standard Land Transfer Tax rate for a residential property purchase of $400,000?
- → Which of the following best describes when land transfer tax is typically paid?
- → A first-time buyer purchases a $450,000 home in Ottawa, outside the City of Toronto. Which land transfer tax relief can they claim?
- → Which type of real estate transaction is generally exempt from GST/HST in Canada?
- → A first-time home buyer signs an agreement in May 2026 to buy a newly built home in Ontario from a builder for $450,000 before tax, to live in as a primary residence. If all conditions are met, what is the most HST that can be rebated under the federal and Ontario rebates combined?
- → A buyer purchasing a $2 million commercial property in Alberta asks what provincial land transfer tax will be due on closing. What is the correct response?
- → Under the Income Tax Act, what is the principal residence exemption?
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- → Under Ontario's Assessment Act, how often does the default schedule call for property to be revalued for assessment purposes?
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