How To Deal With Property Taxes When Buying A Home For The First Time

January 12, 2015

Viewing homes for sale in Fort McMurray and then subsequently buying them can be a tiring affair for many, particularly if you are doing it for the first time. One of the problems that many people run into is having a hard time handling taxation issues. When you buy property in Alberta, as with most parts of the world, you will likely take on tax obligations. These might be taxes that were owed to the government before you actually bought the property, and also those that you have to account for afterwards. Making sure that you understand all of these before buying any property will go a long way in reducing the risk of suffering tax-related penalties.

When should you check the tax status of the home?

The most ideal time for you to do a background check on the tax details for the home you want to buy is as soon as you make the decision to buy it, but before making any commitment. The important things you need to watch out for include:

• Finding out how much tax you will need to pay on the property every year. This is based on the property’s value as well as other factors such as what type of property it is. This information should guide you in making the decision on whether to buy the home or not. If it turns out that the taxes are unaffordable, there would be no point in buying it.

• Finding out whether there are arrears. Did the previous owner clear all their taxes? This is a question that should always be at the back of your mind. You should avoid scenarios where you buy a home and then find that the tax arrears on it are too high, forcing you to find another means of raising funds to pay the tax or lose the house altogether.

If it turns out that there are tax arrears on the house

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If you do a background check and find that there are unpaid taxes, there are several ways of handling it. One would be to ask the seller to clear the tax before selling the house to you, so that you can start off with a clean slate. You might need to redo the check later on to find out if all the taxes have been paid.

The other alternative is to ask for a discount that is equivalent to the value of the tax. This is particularly so if you are buying the house at market value, rather than at a discount.

Reviewing the tax calculations

The other process you might need to initiate as far as taxes are concerned is a review of the tax regime the property is under. The specific issues you need to try and figure out include:

• Finding out if the tax you will be paying is fair: The tax payable due to property ownership is normally calculated using the home’s value. Since the value of a home can change with time, it also means that the property tax payable is also inconstant. Before buying a home, you should ask a qualified assessor to assess the value of the home so that you can then get a clear picture of how much tax will be due when you take ownership. Always avoid assuming that the tax will be calculated based on how much you buy the home for, since this is not the case.

• Figuring out if you are eligible for any tax breaks: There are many tax breaks you might be eligible for when you buy the home. These might be based on your age, whether you are buying a home for the first time or not and what you will be using the home for. Always do some research to figure this out so that you don’t miss out on the potentially huge savings that these breaks will give you.

What if you need help on property tax?

Taxation matters all around the world are usually very complex. Unless you have a background in finance, it might be difficult for you to handle them properly. To avoid this, you should consider getting some professional help. Most relators will have in house tax management departments, and you should try to use their services for all the above.

In summary, the process of taxation can be very complicated when buying a home. In order to avoid nasty surprises in future, it would be wise for you to gain some background information regarding them even before you start shopping for the home. You should be familiar about the normal tax rate, which properties are subject to property taxes and the types of tax breaks you can get. In addition to simplifying the process of acquiring a home, having even a basic knowledge of property taxes is also likely to result in massive savings.

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