Saturday, January 31, 2009

Supplementary Tax Bill

If you are selling a house that has been newly built or extensively renovated, beware that you could be liable for any increase in taxes even after you have sold your home. In June 2008, I sold a house which I built in 2007. The deal closed fine but the taxes on the Statement of Adjustments was for the assessed value of vacant land because the municipality had not reassessed the land tax to include the value of the building. In the fall of 2008, the municipality issued a Supplementary Tax Bill to the purchasers reflecting the increase in value of the property because of a home being built on it. I am now liable to pay for my share of Supplementary Tax Bill during the time that I owned it which works out to about $1500. The purchasers paid the Supplementary Tax Bill in full and have submitted a claim to First Canadian Title and have been reimbursed for what I still owe on land taxes. I am now liable to First Canadian Title to pay back the taxes.

Next time I will be aware of this issue and will ensure that I am not responsible for Supplementary Tax Bills as a condition of closing.

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