# Property tax adjusted after sales?



## dbw (Dec 8, 2011)

I'm interested in buying an older home and the property tax is very low since the owner has been there for a long, long time and the annual increases have been much lower than the inflated real-estate market in the GTA.
If I purchase this house and the price is much higher than the value being used for property tax, does it get adjusted higher to reflect the market value?


----------



## Retired Peasant (Apr 22, 2013)

In Ontario, yes the tax will be adjusted based on actual market value (but still considering other comparable properties in the area). This is usually phased in over a 5 year period.


----------



## dbw (Dec 8, 2011)

Retired Peasant said:


> In Ontario, yes the tax will be adjusted based on actual market value (but still considering other comparable properties in the area). This is usually phased in over a 5 year period.


Thanks for the reply, can you clarify "phased over 5 years"? does it mean that it will gradually increase to market value over the 5 years so I won't have to deal with the sharp increase right after sales?


----------



## kcowan (Jul 1, 2010)

When I sold my cottage in 2000, the buyer wanted to register the purchase at 20% below the actual sale price to avoid an immediate tax increase. The remainder was a cash payment for "good will". This also reduced the capital gains hit from the sale.


----------



## Retired Peasant (Apr 22, 2013)

dbw said:


> Thanks for the reply, can you clarify "phased over 5 years"? does it mean that it will gradually increase to market value over the 5 years so I won't have to deal with the sharp increase right after sales?


Yes, exactly.



kcowan said:


> When I sold my cottage in 2000, the buyer wanted to register the purchase at 20% below the actual sale price to avoid an immediate tax increase. The remainder was a cash payment for "good will". This also reduced the capital gains hit from the sale.


For the seller, but not for the buyer, right? I mean their ACB is lower.


----------



## kcowan (Jul 1, 2010)

Retired Peasant said:


> For the seller, but not for the buyer, right? I mean their ACB is lower.


Yes. In fact the buyer intends to tear the place down or convert it to a bunkee and include it in his property going forward. The rationale for the good will was that it was the neighboring property and would not commend that same price if it were remote from his place.


----------

