Property tax adjustment at closing

Property tax is billed for a whole tax year at a time, but homes change hands on any day. The adjustment is the line on the closing paperwork that shares that year's tax between the seller and the buyer, so each pays for the part of the year they own the home.

Cities do not do this split. The City of Calgary says: "Your lawyer will usually sort out any changes to the property tax during the purchase. Make sure to look at your adjustment statement for any changes in tax made by your lawyer." In Montréal the notary generally does it. The Ville de Montréal says: "Généralement, lors de l'achat de la propriété, le notaire calcule la répartition du paiement des taxes pour l'année en cours, entre l'acheteur et le vendeur" (generally, when the property is bought, the notary works out how the current year's tax payment is split between buyer and seller).

The adjustment is a private settlement between buyer and seller. It does not change the bill: the municipality still bills the full year's tax to the property's tax account.

The direction of the adjustment depends on how much of the year's tax the seller has already paid by the closing date:

- Seller has paid past the closing date. The buyer reimburses the seller for the days after closing, because the buyer will own the home for that part of the year. - Seller has paid less than their share. The seller gives the buyer a credit for the unpaid part of the seller's period, and the buyer then pays the remaining instalments to the city.

In words, with made-up numbers: if the year's tax is $3,650 and the split is done by days, each day is worth $10. A seller who has paid the full year and closes after owning the home for 200 days would be reimbursed $1,650 by the buyer for the remaining 165 days. The way the split is calculated, including whether the closing day counts to the buyer or the seller, is set by the purchase agreement and the lawyers or notaries, not by the municipality. Red Deer's own guidance is: "Speak with your lawyer for explanation of the pro-ration of property taxes".

Property tax attaches to the property, not to the person. Red Deer puts it plainly: a tax roll account "belongs to the property, not the property owner. When properties change ownership, you buy and sell the tax roll account." Its page also says that "When ownership is changed, the new owner assumes any outstanding tax balance due" (in the passage on manufactured homes) and that "Taxes are to be paid in full by the due date regardless of changes of ownership."

In Ontario this is written into the law. Under the Municipal Act, 2001, s. 349 (1), taxes "may be recovered with costs as a debt due to the municipality from the taxpayer originally assessed for them and from any subsequent owner of the assessed land or any part of it", and under s. 349 (3) "Taxes are a special lien on the land in priority to every claim, privilege, lien or encumbrance of every person except the Crown".

The school tax in Montréal works the same way. The CGTSIM says: "The school tax bill is linked to the property, not to the owner. It is your responsibility to pay the bill if you are the current owner of the property, even if the former owner's name still appears on it."

A tax certificate is the official statement from the municipality of what is owing on a property's tax account. It is how the amounts in the adjustment are checked.

The City of Hamilton describes it as "a legal document that provides detailed property tax roll information", including property taxes levied, property tax arrears and upcoming property tax installments, and notes that "Tax certificates are typically purchased by lawyers handling property sales or when a mortgage is being approved for a property." Since October 20, 2025, Hamilton issues them only through its online Tax Certificate Online tool.

In Ontario, s. 352 of the Municipal Act, 2001 requires the treasurer, on written request, to give "an itemized statement of all amounts owing for taxes" on a property, and says that statement "is binding on the municipality." Toronto issues its certificate under s. 317 of the City of Toronto Act, 2006, and its published fee is $90.33 per certificate.

The City of Toronto also warns buyers that "If you are a new property owner and not aware of any upcoming tax instalments or utility bill due dates, penalty and interest is still applicable when payment is received late."

Municipalities update the owner's name on the tax account only after the sale closes or is registered, and some charge a fee for it. Examples from official city pages:

- Calgary: the lawyer "should register the change of ownership at the Province of Alberta Land Titles Office", and the City does not automatically send the new owner the year's bill and notice: "Your lawyer should give you this information as part of the real estate transaction." - Red Deer: the City receives ownership updates from Land Titles "twice a month", and "Processing times at LTO can be up to 4 months." Its page says that if a property is bought after May 1, it is recommended to settle the property taxes and pay in full. - Toronto: ownership is updated from a lawyer's letter that includes the closing date; the City's fee is $51.61 for a tax account change, or $73.78 for tax and utility accounts together. - Hamilton: the lawyer sends the Land Transfer Deed after closing; "Effective January 1, 2025 the Ownership Change Fee is $17.45. This fee is added to your property tax bill." - Montréal: "La Ville ne réémet pas de compte de taxes lors de la vente d'une propriété" (the City does not reissue a tax bill when a property is sold), and the new owner is responsible for making sure the municipal taxes are paid.

In BC, the home owner grant "reduces the amount of property taxes you pay each year on your principal residence", and only one grant can be claimed for a property each year. That matters in the year a home is sold.

The Government of British Columbia says that a buyer who purchased during the current tax year may be able to claim the grant if all of these apply: "The previous owner did not claim the grant on the property"; "You did not receive the grant this year for another property"; and "You're occupying the property as your principal residence when you apply for the grant".

So if the seller already claimed the grant for the year, the buyer cannot claim it again on that property for the same year. Whether a claimed grant is reflected in the adjustment between buyer and seller is a matter for the closing documents. Eligibility is determined by the Government of British Columbia.