How are property taxes adjusted between buyer and seller on closing in Alberta?
This answer covers the law of Alberta.
How property taxes are split between buyer and seller on closing depends on your purchase contract, so it is worth confirming the details with a lawyer. Unpaid taxes matter because property tax is recoverable as a debt due to the municipality and is a special lien on the land and improvements, which is why they are dealt with at closing.
To work out the numbers, your lawyer asks the municipality for a tax certificate, which on request a designated officer must issue showing taxes imposed for the year, taxes owing, tax arrears and any deferred taxes. Tax arrears are taxes that remain unpaid after December 31 of the year in which they are imposed, and a penalty is part of the tax on which it is imposed. How any credit or debit is shown to you depends on your contract and your situation, so it is worth confirming with a lawyer.
If the property is exempt from taxation under the Municipal Government Act, no tax adjustment arises. The exact method comes from your contract, so check it and ask your lawyer to walk you through the line.
Key takeaways
- Unpaid property tax is a debt owed to the municipality and a special lien on the land and improvements, which is why it is dealt with at closing.
- A designated officer must issue a tax certificate on request showing taxes imposed for the year, taxes owing, tax arrears and any deferred taxes.
- Tax arrears are taxes still unpaid after December 31 of the year they were imposed, and a penalty is part of the tax it is added to.
- Property that is exempt from taxation under the Municipal Government Act has no tax adjustment.