Buying a house where Property Tax is NOT assessed yet

[jigsaw-123]

Hello Everyone,

I have just put an offer for our First Home and we are today going for home inspection etc. During offer negotiation, we learned that Property Tax has not been assessed yet on this property.

My concern is; When city catches up on assessment and if there is any difference, would I end up paying for any differerence or may be the full amount which current owner hasn't paid to the city?

How does this thing work in such cases? Do you think City is currently collecting estimated property tax from the current owner?

Please shed some light on this, thanks a lot.

[elty]

If it is not assessed then the current owner is not paying anything (yet).

[naulttm]

The current owners may be paying tax based on the land value. See the following link under Supplementary Tax Bills:
http://www.mississauga.ca/portal/residents/questions

It would probably be best to speak to a real estate lawyer or an experienced agent so a clause could be put in the contract to protect you from being responsible for any additional taxes.

[jigsaw-123]

If it is not assessed then the current owner is not paying anything (yet).

Thanks for the quick reply,

By including (yet) in your reply, did you mean that they will have to pay for the time they lived in this property? If so, would this happen when lawyers work on closing the deal? Or whenever City rolls out the assessment?

[speedyforme]

Thanks for the quick reply,

By including (yet) in your reply, did you mean that they will have to pay for the time they lived in this property? If so, would this happen when lawyers work on closing the deal? Or whenever City rolls out the assessment?

I have a friend who is also not paying true property tax yet and she said they the city will catch up to them. BUT in your case, if you close before the city does something, I get the feeling that you will have to pay for it unless you can do something with your lawyer and the city and determine how this can be handled.

[Beachdown]

You'll pay a pro-rated amount starting from the day you take possession of the house. The former owner will be responsible for the amount owing when he was the owner.

[peelhic]

I moved into a new home where the tax has not been assesed. Right now were paying about 170 bucks every three months... since its only based on the value of the land prior to construction. Based on my information we will be assesed everything back to the day of closing... luckily I know about this so we have been putting the excess into a seperate account.

I had a friend who lived in his house for almost 2 years before being assesed.. no one told him they would want to go back to the closing date and he got a bill for 6000 bucks... lets just say he was freaking out since he hadn't saved it over the period.

Since you are moving in after the initial close there should be no issue with the city come after you for the whole amount... you should only be charged for the time you have owned the house. I can`t see how the city could do this otherwise. Its probably lgood to check it out with your lawyer to make sure though..

[jigsaw-123]

Thanks guys for all the response, Do you think I should put something in the agreement stating any property tax payable to City for prior to closing date be responsibility of the current owner or is this something we can take care of with each others lawyers. Am I too much concerned for something which you see as not much of an issue?

Thanks again.

[speedyforme]

Thanks guys for all the response, Do you think I should put something in the agreement stating any property tax payable to City for prior to closing date be responsibility of the current owner or is this something we can take care of with each others lawyers. Am I too much concerned for something which you see as not much of an issue?

Thanks again.

I would put it in. Never hurts.

[coffeeguy]

You'll pay a pro-rated amount starting from the day you take possession of the house. The former owner will be responsible for the amount owing when he was the owner.

you are wrong, the city does not care who owned it only who owns it. My last place was the same as op and i got nailed with a 9k bill. Glad i bought mtg insurance, they ended paying me back after i paid the bill.

[Tiberius]

I just bought a house in this situation. Luckily, I figured out that the property had not been reassessed since the house had been built, and our lawyer took care of it.

Basically, he spoke with the sellers lawyer and funds were withheld to pay for the taxes when they finally are assessed. They will pay the back tax top up for the time they were in the house, we will pay the back taxes from the date we took possession.

[jigsaw-123]

you are wrong, the city does not care who owned it only who owns it. My last place was the same as op and i got nailed with a 9k bill. Glad i bought mtg insurance, they ended paying me back after i paid the bill.

I am not going to have Mortgage Insurance, what are my options? Is this something lawyers can sort out? How Do I get current owner to be responsible for taxes for the time they lived in the property?

[Beachdown]

you are wrong, the city does not care who owned it only who owns it. My last place was the same as op and i got nailed with a 9k bill. Glad i bought mtg insurance, they ended paying me back after i paid the bill.

You really should think before making statements like "you are wrong". Just because you didn't do your homework doesn't mean others got caught with their pants down. I've closed on 2 new constructions in the last 3 years and both of them were assessed after closing. Both times I paid my share and the builder paid theirs. The buyer of my condo also paid his prorated share of the property taxes. It was in the purchase agreement.

[jigsaw-123]

you are wrong, the city does not care who owned it only who owns it. My last place was the same as op and i got nailed with a 9k bill. Glad i bought mtg insurance, they ended paying me back after i paid the bill.

Did you mean title insurance?

[jigsaw-123]

You really should think before making statements like "you are wrong". Just because you didn't do your homework doesn't mean others got caught with their pants down. I've closed on 2 new constructions in the last 3 years and both of them were assessed after closing. Both times I paid my share and the builder paid theirs. The buyer of my condo also paid his prorated share of the property taxes. It was in the purchase agreement.

Thanks, I will add this in th epurchase agreement just to be sure.

[Frankie3s]

I just bought a house in this situation. Luckily, I figured out that the property had not been reassessed since the house had been built, and our lawyer took care of it.

Basically, he spoke with the sellers lawyer and funds were withheld to pay for the taxes when they finally are assessed. They will pay the back tax top up for the time they were in the house, we will pay the back taxes from the date we took possession.

Sounds good. The funds were held in trust and any amount remaining after the taxes were assessed were returned to the sellers. Any amount short would still be the responsibility of the sellers. However you might have to take them to small claims for resolution.

[Beachdown]

Thanks, I will add this in th epurchase agreement just to be sure.

It's usually a standard clause, but double check, I'm not 100% sure. And make sure it does cover the reassessment, and not just the current tax bill.

[Tiberius]

Sounds good. The funds were held in trust and any amount remaining after the taxes were assessed were returned to the sellers. Any amount short would still be the responsibility of the sellers. However you might have to take them to small claims for resolution.

Our lawyer also mentioned our title insurance would cover us if something went wrong (such as taxes being owed for a period of time before the prior owners were in the house, etc.) I'm not sure how the specifics work - but hope to never have to know either...

[antman59]

I moved into a new house last year and just got a reassesed property tax bill. even though I new it was comming and saved up for it, it still hurts.>:(
Try and get a general idea of how much it will be and save for it monthly. Over estimate rather than under estimate.

[jigsaw-123]

Spoke with my lawyer, got this added on in the contract, let's see if Sellers have any issues with that.

Again, thanks all for your input.

[LondonTown]

Title insurance will cover it.