With the coming crash of the Toronto real estate market in 2011, Toronto
homeowners will realize decreasing values in their homes in spite of the amount
of money they owed on their mortgages. Many in Toronto assumed that this drop in
real estate values would be accompanied by a drop in property taxes. To their
dismay this did not follow so that although the value of the home was less on
the market, the amount of property taxes either stayed the same or increased.
Homeowners traditionally thought that the amount of property taxes they had to
pay on an annual basis was closely tied to the market value of their home. So
when they received their bills, they were shocked to find that this was not the
case. Many of them found that the taxes had actually risen a lot higher than
they expected and of course, they had many questions about how this could
happen.
Due to the crash of the Toronto real estate industry and layoffs in all sectors
of the economy, the number of loan defaults and foreclosures rose sharply in
2011. As a result, counties all over the country found themselves in a deficit
situation due to unpaid property taxes. The Greater Toronto area, for example,
is one of these hard hit regions of the country where the housing prices have
declined to an all-time low. Jobs are at a premium and there are massive numbers
of people who have lost their jobs due to the downturn in the economy,
particularly the automotive sector. This is one of the main reasons for the
crash of the real estate industry in Toronto, as in others.
Foreclosures do not always result from
Toronto real estate owners not being able to make their monthly mortgage
payments. Municipal governments can foreclose on real estate for unpaid taxes
when a homeowner has not paid the property tax bill for three consecutive years.
The county has the right to foreclose on the real estate and sell it at auction
for the amount of back taxes owing on the property. There are millions of
dollars owed in back taxes in the Greater Toronto area, and this had a
significant effect on the number of real estate foreclosures on the market and
on auction.
There are steps a Toronto homeowner can take once he/she realizes that there are
serious arrears in property taxes. Instead of making the payment in one annual
lump sum, you can make regular payments on this account, just as you can with a
loan or a credit card. The problem arises when homeowners do not realize that if
they contact the county to make payment arrangements, they are not considered in
default. As a result, they choose to ignore the statements and pay nothing at
all.
If you cannot pay all of your real estate taxes when you receive your annual
statement, you do have the option of making a partial payment. This is better
than ignoring the situation, which will only get worse as time goes on. If you
are in arrears, taking steps to pay off the oldest tax accounts will enable you
to keep your home and avoid foreclosure by the county.
You may be eligible for an extension on unpaid property taxes, but you do have
to contact the city of Toronto in order to find this information. For example,
if you can demonstrate that you are experiencing extreme financial hardship, you
may be exempt from the taxes. Instead of waiting until it is too late, it is
best to contact the city as soon as possible to apply for extensions and
exemptions because there are deadlines for the applications.
It is also possible that your bank or mortgage company offers a program to help
you with paying your property taxes on time. Some Toronto real estate owners
have this included as part of the mortgage payment and the lending institution
receives the bill and takes charge of paying it in full. You don’t even realize
that you are paying your taxes and any overpayment remains in the account for
next year’s property taxes.
Toronto banks do not want the city to foreclose on homes that they have
mortgaged in order to collect back taxes. Therefore, the lender will likely be
able to work with you to find a solution to the problem, such as giving you a
loan to repay the taxes. Either way, whether you pay the taxes through monthly
payments or take out a loan for the payment, you will be incurring additional
debt.