This tax season I’ve got a lot of question about Property Tax payment via bank. Here are a couple things to remember when you process your annual payment.
The client usually needs to send a copy of their current tax notice and confirmation they have claimed their Home Owner Grant to the bank.
· CAN CLIENTS PAY THEIR OWN PROPERTY TAXES?
o YES. All clients; high ratio, conventional, fixed or variable have the choice to pay their own taxes. A bank defaults to collect PIT payments, so make sure to tick the box on your online mortgage profile that indicates clients wish to not have Property Taxes collected.
· WHAT IS THE PROCESS?
o The process is simple. A bank collects a regular amount from client with their mortgage payment, and the money is set aside in Property Tax Savings Account. When the client receives annual tax bill, they simply forward it to their mortgage provider.
· WHAT IS A PROPERTY TAX SAVINGS ACCOUNT?
o Funds accumulate in client’s Property Tax Savings Account and are used to pay their annual property taxes.
· WHAT IF THE BANK HAS ONLY COLLECTED 2-MONTHS OF PAYMENTS WHEN CLIENT’s ANNUAL PROPERTY TAX BILL IS DUE?
o The bank will always pays the tax bill in full. If there is a shortfall on tax account, an annual interest may be charged on this amount. The client may pay the balance into the account to avoid additional debt.
· WHAT IS A SURPLUS?
o A surplus is money accumulated in your Property Tax Savings Account, and will be applied towards your upcoming property tax payment.
· WHAT IS A SHORTFALL?
o A shortfall in your Account happens if there was not enough money in the Account when property taxes were paid. This money needs to be reimbursed to the bank for taxes paid on your behalf. If there is a shortfall in your Account, you are charged an interest rate equivalent to your mortgage rate. Bank take the outstanding amount into account when calculating your new tax portion for the upcoming tax year. The client may reduce the shortfall in the Account by making a lump sum payment into the Account, or a series of payments over time. If the new tax portion is not manageable, you can extend the repayment of the shortfall over more than one year.
· HOW IS THE TAX PORTION CALCULATED?
o We divide your annual property taxes by the number of payment which you make annually (12, 24, 26 or 52).
· FOR PROPERTIES IN BRITISH COLUMBIA-
o If your property is in British Columbia, we pay only the net amount of your property taxes, unless our records indicate otherwise. Homeowners who are eligible for the Home Owner Grant are responsible for applying directly to the municipality for a reduction in taxes each year. Home Owner Grant Applications may be obtained from your municipality. Proof of the Homeowners Grant need to be sent to the bank.
· The link to claim BC Home Owner Grant is: https://www2.gov.bc.ca/gov/content/taxes/property-taxes/annual-property-tax/home-owner-grant/apply
· Clients will need to have their property tax bill handy to reference information required, and also have their Social Insurance Number.
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