Falling behind on property taxes can be stressful and overwhelming for many Canadian homeowners. If left unpaid, property taxes can lead to a serious consequence called a tax sale, where the government has the legal right to sell your property to recover unpaid taxes. But don’t panic! There are ways to stop or prevent a tax sale in Canada. This guide explains what a tax sale is, how it happens, and practical steps you can take to protect your home.
What is a Tax Sale in Canada?
A tax sale is a legal process where a municipal government sells property to recover unpaid property taxes. Every province and territory in Canada has its own rules and timelines regarding tax sales, but the general principle is the same: if property taxes remain unpaid for a certain period, the government can claim the property and sell it.
According to the Municipal Property Assessment Corporation (MPAC), unpaid property taxes are a serious issue because they fund essential local services like schools, fire departments, and roads.
How Do Tax Sales Work?
When property taxes go unpaid, municipalities usually send reminders and notices to the homeowner. If taxes remain overdue after a specific period (usually between 1 to 3 years, depending on the province), the municipality can start legal proceedings to recover the debt through a tax sale.
The process generally includes:
- Notice of tax arrears sent to the homeowner.
- Public notices of pending tax sales are published in newspapers or municipal websites.
- The sale of property at auction to recover the tax amount owed.
Each province has specific legislation governing tax sales. For example, Ontario follows the Municipal Act, 2001, while British Columbia has the Tax Sale Act.
What Happens if My Property is Sold in a Tax Sale?
If your property is sold in a tax sale:
- You may lose ownership of your home.
- The new owner can take possession once legal requirements are met.
- You might be able to redeem your property by paying the owed taxes plus fees within a limited timeframe, depending on the province.
Tax sales can have a severe impact on your credit and financial future, so acting early is crucial.
How to Stop a Tax Sale in Canada?
If you’re behind on property taxes, don’t wait until it’s too late. Here are steps you can take to stop or prevent a tax sale:
1. Contact Your Municipality Immediately:
Reach out to your local tax office to discuss your situation. Many municipalities are willing to work with homeowners by offering payment plans or deferrals to avoid tax sales.
2. Set Up a Payment Plan:
Most municipalities provide options to spread your tax payments over time. Contact your tax collector to arrange a payment plan based on what you can afford.
3. Explore Financial Assistance Programs:
Certain provinces offer programs for low-income homeowners or seniors to help with property taxes. Check if you qualify for any grants, rebates, or deferrals. For example, Ontario has the Property Tax Credit Program designed to assist eligible homeowners.
4. Consider Refinancing or Home Equity Loans:
If you have equity in your home, refinancing your mortgage or taking a home equity loan can provide funds to pay off back taxes and avoid a tax sale. Consult with a mortgage professional to understand your options.
5. Seek Professional Advice:
If you’re overwhelmed, seek help from a financial advisor, mortgage broker, or lawyer who specializes in tax sales. They can help negotiate with municipalities or explore legal options.
What to Do If Your Property Has Already Been Listed for Tax Sale?
If you receive a notice that your property is scheduled for tax sale:
- Act immediately by contacting your municipality.
- Pay the overdue taxes plus any penalties if possible.
- Investigate if your province allows a redemption period after the sale where you can reclaim your property by paying owed amounts plus fees.
Preventing Tax Sales – Tips for Homeowners:
- Stay organized: Keep track of all property tax notices and deadlines.
- Budget for taxes: Include property taxes in your monthly budget to avoid surprises.
- Set reminders: Use calendar alerts for payment due dates.
- Communicate early: If you anticipate difficulty paying, contact your municipality before taxes become overdue.
The Role of Mortgage Agents in Avoiding Tax Sales:
Mortgage agents can assist homeowners facing financial difficulties by:
- Helping refinance mortgages to free up cash.
- Advising on home equity loans or lines of credit.
- Guiding you toward affordable payment solutions.
If you’re worried about property tax arrears, connect with a trusted mortgage agent who can help you explore options to avoid losing your home.
Final Thoughts: Don’t Wait to Act
Behind on property taxes? The sooner you take action, the better your chances of stopping a tax sale and protecting your home. Reach out to your municipal tax office, explore payment options, and seek professional guidance.
For expert help navigating mortgage refinancing or home equity loans to cover overdue taxes, contact a licensed mortgage agent at Mortgage Squad today for personalized advice.