Definition
Property tax is an annual tax collected by the municipality on your property's value according to the municipal assessment. It typically represents 0.5% to 1.5% of the assessed value per year, depending on the municipality.
In mortgage calculation, lenders include property taxes in the Gross Debt Service (GDS) ratio. For a stress-tested loan, annual taxes divided by 12 are added to the monthly mortgage payment when evaluating repayment capacity.
In Montreal, for a property assessed at $600,000, property taxes typically range from $4,200 to $6,000 per year depending on the borough. They are payable in two installments (March and September). Late payment triggers penalties and, ultimately, forced sale by the municipality (tax default sale).