Pre-Paid Property Taxes
Property taxes are payable to the applicable taxation authority (city, district, municipality, etc.) in the middle of the year (generally, early July) for the entire calendar year. To take the stress out of paying the full amount of your annual property taxes, most cities, districts and municipalities have programs permitting monthly prepayments of your annual property taxes.
There are generally no fees charged by the applicable city, district or municipality related to prepaying property taxes; however, it is prudent to confirm that your financial institution will not charge fees for pre-authorized payments.
Prepaid property taxes will earn interest which will be applied to your property taxes. For example, simple interest in the amount of the Royal Bank prime rate less three per cent (minimum 0.4 per cent) is paid on all prepaid property taxes held by the City of Kelowna.
Prepayments are generally set up through an automatic monthly withdrawal through a Pre-Authorized Withdrawal System (PAWS) starting in July or August (depending on the city, district or municipality) and ending in May. The final June payment is generally not automatically withdrawn from your bank account. Accordingly, you are responsible to make the final payment and claim the home owners’ grant (if you qualify).
Please note that, depending on your particular situation, your lender may be attending to payment of your property taxes on your behalf. In this case, there is no need to set up pre-authorized payment through the applicable taxation authority. Instead, you may simply claim the home owners’ grant (if you qualify) and your lender will remit payment on your behalf.
If you have made arrangements for the pre-payment of your property taxes and you have agreed to sell your property, you must contact the applicable city, district or municipality to cancel your pre-authorized payments. For greater clarity, the sale and transfer of the property does not automatically stop the PAWS payment.
There are also processes through which the seller may seek to have prepaid property taxes reimbursed directly by the city, district or municipality. However, the standard practice in British Columbia is to adjust for prepaid taxes (and any accrued interest) upon the completion of the purchase and sale of a property. Depending on the time of year, this may mean that the buyer must reimburse the seller the amount of the prepaid taxes in full. If you are considering purchasing a property, particularly after the property tax due date (generally, early July), it is prudent to inquire as to whether there are any prepaid property taxes and to take this figure into account in making financing arrangements.
If you are interested in learning more about setting up a pre-authorized withdrawal for your annual property taxes, please contact the applicable city, district or municipality. Here are a few links that you may find helpful:
- City of Kelowna: https://www.kelowna.ca/homes-building/property-taxes/payment-options/prepayment-programs
- City of West Kelowna: https://www.westkelownacity.ca/en/city-hall/payment-options.aspx
- District of Lake Country: https://lakecountry.civicweb.net/document/2064/Property%20Tax-Prepayment%20Application.pdf?handle=0C62A93A26F9485CB00FB40831FD613D
- City of Vernon: https://www.vernon.ca/homes-building/taxes-grants/property-taxes-estimator/prepayment-program
- District of Peachland: https://www.peachland.ca/cms/wpattachments/wpID205atID2782.pdf
- City of Penticton: https://www2.gov.bc.ca/gov/content/taxes/property-taxes/annual-property-tax/pay/how-to
- Regional District of Central Okanagan (and all other rural area properties): https://www2.gov.bc.ca/gov/content/taxes/property-taxes/annual-property-tax/pay/how-to
Author: Danielle (Dani) Brito
This information is general in nature only. You should consult a lawyer before acting on any of this information. This information should not be considered as legal advice. To learn more about your legal needs, please contact our office at (250)448-2637 or any of our lawyers practicing in the area of real estate law at the following: