Home buyers must keep taxes in mind when choosing locations in Canada. Want to know the highest property taxes in Alberta? What about the lowest? Find out here
For aspiring property buyers in Canada, there are many things to prepare for. They need to save money for down payment in order to secure a mortgage and take note of additional expenses. They should also study the area where they want to buy property.
Securing a mortgage to buy a home in Alberta can be challenging if your clients are uninformed about this province’s real estate market. Staying updated on the prices of listed houses in Alberta and comparing them with other locations can be beneficial for soon-to-be homeowners.
Learning about the property tax rates can also prove to be helpful. Do you know which municipalities have the highest property taxes in Alberta? What about those with the lowest? You can assist your clients better if you are well-informed and updated about these figures.
That’s why in this article, Canadian Mortgage Professional will discuss Alberta’s highest property taxes as well as the lowest. We will shed light on what property tax rates are and why they are paid. We will also help you understand how this type of tax is calculated. Want to know Alberta’s cost of living for your clients’ benefit? Keep reading for more.
Municipalities with the highest property taxes in Alberta
In their latest analysis, brokerage and information portal Zoocasa outlined Alberta’s real estate markets with the lowest and the highest property taxes. The municipality with the most expensive property tax rates is Wetaskiwin. It also took the first spot in 2022.
Check out this comparative table below:
For new and seasoned mortgage brokers, knowing these figures can be an advantage. Your clients will appreciate sound advice combined with factual reasoning. Keeping up with property tax rates can give you an edge when providing recommendations.
As you formulate better strategies for success, you might just see your name along with the top brokers in the industry one day. Go to our Best in Mortgage page to boost your confidence!
Which municipality has the lowest property tax in Alberta?
Canmore has the lowest property tax in Alberta. Its property tax rate is less than 0.50%. If you have clients who wish to reside in Canmore, less than $1,200 in property taxes is required for a house valued at $250,000.
Here are the top ten municipalities with the lowest property taxes in Alberta:
Property taxes should not be overlooked
According to Zoocasa, property taxes are considered as a significant carrying cost. As such, these taxes should also be a major consideration for aspiring property buyers.
What happens if your clients don’t fulfill their tax obligations? They might find themselves burdened with an unexpectedly large bill. This is on top of their already considerable mortgage payments.
However, your clients should not make the mistake of assuming that markets with the lowest taxes also offer more affordable housing. This can vary per municipality. To help your clients find the most affordable housing in Canada, read this article.
What are property taxes?
Property taxes are fees that local governments charge on real estate properties. For property buyers, this is an additional cost that they should pay when they purchase a house or a portion of land.
If your clients are unaware, remind them that all homeowners in Canada pay property taxes every year. This will be based on their property’s assessed value.
Why should your clients pay property taxes?
For residents in a specific location, their property taxes will be used to fund local government programs and services like police and fire protection. They can also be allocated for environmental services such as garbage collection, as well as the operation and maintenance of public spaces. Other local services that are funded by property taxes include:
- roads
- schools
- healthcare facilities
- emergency services
- other government projects
In Alberta, each municipality assesses the value of properties. This determines how much is owed by the taxpayers. The tax rate also varies from one municipality to another. This property tax rate is usually a percentage of the property's assessed value.
Property taxes apply to different types of properties such as:
- residential properties
- rental properties
- commercial units
- industrial sites
Every year, real estate owners and investors will receive a tax bill that shows the total amount due for their property taxes. This can also have additional local fees. Some municipalities offer exemptions or discounts for certain groups, like seniors or low-income families.
What happens when property taxes are not paid?
If property taxes are not paid, the local government can place a lien on the property or even start foreclosure proceedings. This is why your clients need to check with their local government for specific rates and rules, as these can differ across provinces and municipalities.
For example, property is taxed based on the ad valorem (“according to value”) principle in Alberta. What this means is that the property tax which the homeowner must pay is based on the value of the property.
Want to better advise your clients on reducing property taxes? Watch this video:
Try providing expert advice on property taxes or any other mortgage issues if you want to establish your brand—just like the top 75 brokers in Canada. Another good reason to check out our list: the top broker is from Alberta!
How are property taxes calculated in Alberta?
Property taxes in Alberta can be determined by multiplying the assessed value of your client's property by the tax rate of the municipality where it is located. For better understanding, here is an illustration of the formula:
Here is a video on how property taxes are calculated:
Individual property tax calculations
As for how an individual’s property tax is calculated, it will depend on these three factors:
The total assessment of a property’s value
The total assessment of a property’s value is provided by the Assessment Services Branch. They also provide updates annually. This amount is determined by evaluating the current house prices in a municipality while taking some features of a particular property into account.
A property’s assessed value is affected by its renovations and added amenities. Some examples are:
- extended kitchen
- new garage
- swimming pool
- other renovations
The education tax rate
Alberta has an implemented education tax rate for its residents. The taxes collected are used by the local government of each municipality for the funding of regional schools.
The residential tax rate
Another tax rate that is imposed in Alberta is the residential tax rate. Every year, each municipality’s city council determines how much money needs to be raised to meet their budget needs.
Do seniors pay less property taxes in Alberta?
Senior citizens in Alberta can choose to defer all or part of their municipal property taxes with a low-interest home equity loan through the Seniors Property Tax Deferral Program. This also includes education taxes.
Here are the requirements for the Seniors Property Tax Deferral Program in Alberta:
- applicant must be 65 years old or older with only one spouse or partner who needs to be at least 65 years old
- applicant must be a resident in Alberta who has lived in the province for at least three months
- applicant must own a residential property in Alberta and the home must be their primary residence
- applicant must have a minimum of 25% equity in their home to allow the government to secure the loan and ensure repayment when the loan is due
Cost of living in Alberta
If you have clients who want to buy property in Alberta, it is helpful for them to learn about the province’s cost of living. For starters, the average home price in the area is $494,920. This is $150,000 less than the average cost of properties across the country.
This makes Alberta one of the most expensive provinces in Canada to reside in. Aside from the costly home prices, the cost of living in Alberta is also high. This can be observed in terms of:
- utilities like electricity and water
- transportation costs
- car maintenance and fuel
- parking fees
- groceries
- childcare
For house prices, Alberta is the fourth most expensive in Canada behind British Columbia, Ontario, and Quebec. If you are curious to know which provinces have the highest cost of living in Canada, check out this article.
Navigating highest property taxes in Alberta
When searching for properties in the area, advise your clients about municipalities that have the highest property taxes in Alberta—along with the lowest. For better management of their finances, you can educate your clients about these figures, even outside of the province. This will allow them to budget more effectively and avoid unexpected costs.
They can also align their budget or choose to buy a larger house if they can navigate these taxes wisely. Understanding a location’s cost of living, whether in Alberta or elsewhere, helps your clients better prepare for the expenses associated with securing a mortgage.
How do you assist your clients in navigating the highest property taxes in Alberta? What about the lowest? Feel free to share your insights in the space provided below.
