The end of June is “high season” for residential real estate closing. As the school year comes to the close and the weather turns warmer, people want to get the “business of moving” done prior to enjoying summer holidays.
There are a couple of unique considerations for Kelowna Real Estate at this time of year, all of which revolve around the July 2 Municipal Property Tax payment deadline.
- For closings before June – the municipal property tax payment is the responsibility of the new Buyer and the Seller receives a debit at closing based on the estimated bill to be paid (or the assessment if available).
- For closing after early July – the municipal property tax payment is the responsibility of the Seller (prior to vacating) and Buyer will receive a debit at closing for the amount already paid.
For closings in June and early July, a couple of key points for Sellers:
- When you pay your property taxes (at a bank or at the city), ensure that you keep your receipt.
- For your principal residence, make sure that you claim your Home Owners Grant on your principal residence when you pay your taxes (more info on eligibility here)
- Depending on the municipality and the timing of the payment, Sellers closing at the end of June may be legally required to holdback an amount of closing to ensure that property taxes have been paid (ensure you have budgeted for this extra temporary cost).
Your Kelowna Real Estate Lawyer will make adjustments such that the Buyer and Seller each “pay” for those expenses which accrue to the property during that time of the year (a per diem adjustment) that each party owns the property being transferred.
The Home Owners Grant that is actually claimed is the amount adjusted for. This can result in some “inequity” in some cases. For example where the Buyer is a Senior buys a property from an Investor and the Seller has already paid the property tax the difference in Home Owner Grant amounts means the Senior may pay an extra $500 in property tax.
These situations may not be entirely avoided but in some cases they can be minimized by talking to your Kelowna Real Estate Lawyer early. For instance (in the example above), we would try to have the Senior Buyer pay the taxes and claim the grant (and debit the Investor Seller) if this was legally possible prior to the municipal tax deadline.
Written by Kelowna Real Estate LawyerPeter Borszcz.