Property Taxes in Quebec: Calculation, Payment, and Lender Tax Account

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Property taxes are a recurring financial obligation for every property owner in Quebec. Collected annually by municipalities, they fund local services such as roads, water supply, sewers, waste collection, police, and fire services. The calculation is based on the value recorded in the property assessment roll, established by the municipal assessor according to the standards in Quebec's Property Assessment Manual. This assessment is updated every three years in most municipalities. The tax rate, expressed per $100 of assessment, varies significantly from one municipality to another. For example, Montreal applies a residential rate different from Quebec City or Gatineau. Beyond the general property tax, special taxes may apply, such as water tax, local improvement tax, or surcharges for vacant lots. When obtaining a mortgage, the lender may require a property tax escrow account. This means the owner pays a monthly amount to the lender, who accumulates the funds and pays the property taxes directly to the municipality on due dates. This practice is common when the down payment is less than 20%, as the mortgage insurer (CMHC, Sagen, or Canada Guaranty) often imposes this condition. AMF-certified mortgage brokers must clearly explain this mechanism to clients and its impact on monthly mortgage payments.

Property Taxes in Quebec: What Every Owner Needs to Know

Property taxes are the primary revenue source for Quebec municipalities. They fund all local services that residents benefit from: road maintenance, snow removal, drinking water supply, sewer systems, waste and recycling collection, police and fire services, libraries, and parks. Understanding how they work is essential for every buyer planning to purchase a property.

The Property Assessment Roll

The property assessment roll is the official register that assigns a value to every property within a municipality's territory. This exercise is carried out by certified assessors according to the standards in Quebec's Property Assessment Manual. The roll is generally revised every three years and reflects the market value of properties at a specific reference date, being July 1, 18 months before the new roll comes into effect. It is important to understand that the municipal assessment can differ significantly from current market value, especially in a fast-moving market.

Calculating Your Bill

Your property tax amount results from multiplying the value on the assessment roll by the tax rate set annually by the municipal council. This rate is expressed per $100 of assessment. Beyond the general property tax, your bill may include specific taxes: water tax, local improvement tax, sector tax, or vacant land surcharge. Rates vary considerably between municipalities, ranging from less than $0.50 to more than $1.50 per $100 of assessment depending on the region and the level of services provided.

The Lender Property Tax Account

Many mortgage lenders require a property tax escrow account, particularly when the down payment is less than 20%. This account works as a monthly provision: the owner pays one-twelfth of the annual property tax amount with each mortgage payment. The lender accumulates these funds in a trust account and remits them directly to the municipality on due dates. This mechanism protects the lender by ensuring taxes are always paid, since a municipality holds a priority ranking higher than the mortgage in the case of unpaid taxes. For the homeowner, it simplifies budget management by spreading the expense over 12 months rather than one or two annual payments.

Contesting Your Property Assessment

If you believe your property assessment is too high relative to the actual market value of your property, you have recourse. A review request must be filed with the responsible municipal body within the prescribed timeline after the new triennial roll is deposited. You will need to provide évidence such as recent comparable sales, a certified appraiser's report, or documentation of issues affecting your property's value. If the administrative review does not satisfy you, an appeal before the Tribunal administratif du Quebec (TAQ) is possible.

Frequently Asked Questions

How are property taxes calculated in Quebec?

Property taxes are calculated by multiplying the value on the property assessment roll by the tax rate set by the municipality. For example, if your property is assessed at $350,000 and the rate is $0.85 per $100 of assessment, your annual property tax would be $2,975. Additional taxes (water, local improvement) may also apply.

What is a lender property tax account?

A lender property tax account is a trust account in which the homeowner deposits a monthly amount to cover property taxes and sometimes home insurance. The lender accumulates these funds and pays the bills directly to the municipality. This account is often mandatory when the down payment is less than 20%.

Can I contest my property assessment?

Yes, any property owner can contest their assessment by filing a review request with the responsible municipal body within the prescribed timeframe following the deposit of the new assessment roll. The request must be accompanied by évidence that the assessed value does not reflect actual market value.

Are property taxes adjusted at the time of sale?

Yes, during the real estate transaction, the notary performs a property tax adjustment between the seller and buyer. The seller is responsible for taxes up to the closing date, and the buyer assumes responsibility from that date forward. The prorated calculation is recorded in the deed of sale.

Are property taxes tax-deductible?

For a principal residence, property taxes are not tax-deductible in Canada. However, for a rental property, property taxes are a deductible expense from gross rental income on both your fédéral and provincial income tax returns.