Before you buy a home, you need to know exactly what your property taxes will be. They are the second-largest ongoing housing cost after your mortgage — and they can vary by thousands of dollars depending on the municipality. This guide walks you through calculating, estimating, and planning for property taxes.
The property tax formula
| Component | What It Means | Where to Find It |
|---|---|---|
| Assessed value | The value the province assigns to the property | Provincial assessment authority website or property listing |
| Municipal tax rate | The percentage the city charges per dollar of assessed value | City/municipality website — usually published in the annual budget |
| Formula | Property Tax = Assessed Value × Municipal Tax Rate | — |
Example calculation
| Step | Details |
|---|---|
| Home assessed value | $550,000 |
| Municipal tax rate | 0.95% (or 9.5 mills) |
| Annual property tax | $550,000 × 0.0095 = $5,225 |
| Monthly equivalent | $5,225 ÷ 12 = $435/month |
Understanding mill rates
Mill rates are used by many municipalities instead of percentages. One mill = $1 per $1,000 of assessed value.
| Mill Rate | Percentage Equivalent | Tax on $500,000 Home |
|---|---|---|
| 5 mills | 0.50% | $2,500 |
| 8.5 mills | 0.85% | $4,250 |
| 10 mills | 1.00% | $5,000 |
| 12.5 mills | 1.25% | $6,250 |
| 15 mills | 1.50% | $7,500 |
| 17.5 mills | 1.75% | $8,750 |
To convert: Divide the mill rate by 1,000 to get the decimal (10 mills ÷ 1,000 = 0.01 = 1.0%).
How to look up assessed values by province
| Province | Assessment Authority | Website | Lookup Available? |
|---|---|---|---|
| Ontario | MPAC | aboutmyproperty.ca | Yes — free with roll number |
| British Columbia | BC Assessment | bcassessment.ca | Yes — free online search |
| Alberta | Municipal assessor | Varies by city (e.g., assessmentsearch.calgary.ca) | Yes — city websites |
| Quebec | Municipal roll | Varies by municipality | Yes — varies |
| Manitoba | Manitoba Assessment Services | gov.mb.ca | Limited online |
| Saskatchewan | SAMA | sama.sk.ca | Limited online |
| Nova Scotia | PVSC | pvsc.ca | Yes — free search |
| New Brunswick | SNB | SNB.ca | Yes — online |
How to find the tax rate
Most city websites publish the current residential tax rate in their annual budget or property tax section. Search for “[city name] property tax rate 2026” or look under the finance/taxation section of the municipal website.
Estimating property taxes before buying
When you are browsing listings, follow these steps:
Step 1: Check the listing
Most MLS listings include the annual property tax amount. This is the fastest way to get a number — but verify it, because:
- The listed amount may be based on an older assessment
- A reassessment may have occurred since the listing was created
- The tax rate may have changed
Step 2: Look up the assessed value
Visit the provincial assessment authority website and search by address. Compare the assessed value to the asking price.
| Scenario | Implication |
|---|---|
| Assessed value < purchase price | Taxes may increase at next reassessment |
| Assessed value ≈ purchase price | Current taxes are likely accurate |
| Assessed value > purchase price | You may have grounds to appeal (and lower your taxes) |
Step 3: Calculate with current rate
Use the formula: Assessed Value × Tax Rate = Annual Property Tax
Step 4: Project future increases
| Scenario | Assumption | Method |
|---|---|---|
| Conservative | 2–3% annual increase | Multiply current tax by 1.025 per year |
| Moderate (appreciating market) | 4–6% annual increase | Multiply by 1.05 per year |
| Reassessment year in hot market | 10–20% one-time jump | Add 15% to current assessment and recalculate |
5-year property tax projection ($5,000 starting)
| Year | 2.5% Increase | 5% Increase | 10% Jump Year 3 |
|---|---|---|---|
| Year 1 | $5,000 | $5,000 | $5,000 |
| Year 2 | $5,125 | $5,250 | $5,125 |
| Year 3 | $5,253 | $5,513 | $5,638 (reassessment) |
| Year 4 | $5,384 | $5,788 | $5,779 |
| Year 5 | $5,519 | $6,078 | $5,923 |
| Total paid | $26,281 | $27,629 | $27,465 |
Property tax impact on mortgage qualification
Your lender includes property taxes in the GDS ratio:
| GDS Component | Monthly Amount |
|---|---|
| Mortgage payment (stress test rate) | $2,800 |
| Property taxes | $450 |
| Heating | $100 |
| 50% condo fees | $200 |
| Total | $3,550 |
| Required income (GDS ≤ 39%) | $109,000 |
How much property taxes cost you in borrowing power
| Monthly Property Tax | Annual | Lost Borrowing Power (vs. $200/month baseline) |
|---|---|---|
| $200 | $2,400 | — |
| $350 | $4,200 | −$24,000 |
| $500 | $6,000 | −$48,000 |
| $700 | $8,400 | −$80,000 |
| $900 | $10,800 | −$112,000 |
Every additional $100/month in property taxes reduces your borrowing capacity by roughly $15,000–$20,000.
Paying property taxes: your options
| Payment Method | Details | Pros | Cons |
|---|---|---|---|
| Through mortgage (escrow) | Lender adds 1/12 to each mortgage payment | Automatic, no missed payments | Slightly higher mortgage payment |
| Direct — monthly instalments | Pay city directly each month | No lender involvement | Must remember to pay |
| Direct — quarterly | Four payments per year | Fewer transactions | Larger lump sums |
| Direct — annual lump sum | One payment per year | Some cities offer early-payment discounts | Requires saving/budgeting |
CMHC-insured mortgages often require the lender to collect property taxes via escrow. If your down payment is less than 20%, expect this.
Tax adjustment at closing
When you buy a home, your lawyer handles the property tax adjustment:
| Scenario | What Happens |
|---|---|
| Seller prepaid full year, you close July 1 | You reimburse seller for the July–December portion |
| Seller has not paid yet, you close July 1 | Seller credits you for January–June (their portion) |
| Taxes are paid monthly by lender | Adjustment based on what’s been collected vs owing |
This adjustment appears on your Statement of Adjustments — one of the closing documents your lawyer prepares.
Property tax planning checklist
| Item | Action |
|---|---|
| Before making an offer | Look up assessed value and calculate annual property tax |
| In your budget | Include property taxes as a monthly line item |
| At mortgage application | Tell your lender the estimated property tax so they qualify you accurately |
| At closing | Your lawyer handles the tax adjustment between buyer and seller |
| After purchase | Set up payment (escrow or direct) and monitor your assessment |
| Reassessment year | Review your new assessed value and appeal if too high |
| Annually | Check for available credits, grants, or deferral programs |