Buying a home in Ontario with a December closing: how is that year's property tax split?
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Picking the right closing date is. Skip the last days before Christmas, and weigh penalty, interest and carrying costs together.
$6,000 ÷ 365 × 17 days. Credited to the seller and added to what the buyer pays at closing.
- 01Avoid the last days before Christmas
- 02First bills may show the seller's name
- 03New builds can get a late tax bill
The other side wanted to wait out a mortgage penalty. Interest barely changed, and that month's tax, utilities and internet came to over a thousand.
Buying again a few months later? The bank may ask for it. Investors, keep every year's tax bill too.
Tell Yifei your closing date, how much tax the seller has paid and whether it's a new build. He'll tell you straight what to do.
Ask YifeiOntario property tax runs on the calendar year, and the lawyers split it by the day at closing: the seller pays up to closing, and the buyer pays from the closing day on. With a December closing, the seller has usually paid the whole year already, so the buyer reimburses the seller for the rest of December. That amount shows up on the lawyer's statement of adjustments and is settled on closing day.
How the math works
One formula: annual tax ÷ 365 × the buyer's days.
A worked example: annual tax of $6,000, closing on December 15, 2026, with the year fully paid by the seller. The buyer covers December 15 to 31, which is 17 days. $6,000 ÷ 365 × 17 comes to about $279.45, credited to the seller and added to what the buyer pays at closing.
Which way the credit goes depends on what the seller has paid:
What to watch with a December closing
- Avoid the last days before Christmas. Law offices and banks start closing for the holidays in late December, and documents can run late. Yifei has had a client push for an earlier closing, only for the lawyer to say the paperwork couldn't be ready in time.
- Watch the first bills. Tax bills in the first months after closing may still carry the seller's name. In Toronto, for example, the interim bill early in the year can still show the previous owner, and the name is usually updated on the final bill. Check the account and mailing address on your city's website and pay on time.
- New builds. Ontario's property assessment agency can issue a supplementary or omitted assessment that reaches back to the current year and the two years before, and that bill often arrives a year or two later. If it covers time before you owned the home, send it to your lawyer, and have your lawyer look at who pays before you sign.
- Water, hydro, gas and internet usually aren't part of the tax adjustment; each one gets a meter reading and transfer on closing day. Ask your lawyer which items go on the statement.
What Yifei has seen
In one deal, the other side's mortgage term didn't end until early in the new year, and they wanted to push closing past it to avoid a prepayment penalty. Yifei ran the numbers: closing a month earlier made little difference on interest, and saved over a thousand dollars in property tax, utilities and internet for that month. When you set a year-end closing date, weigh the penalty, interest and carrying costs together.
Clients also ask where all the money went. Yifei's answer: before closing, the lawyer issues the statement of adjustments, and every item, from tax to deposits, is listed there.
Keep that statement after closing. Yifei had a client who bought another home a few months after selling, and the bank wanted the previous statement of adjustments before approving the mortgage. Investors should also keep every year's tax bill; one client who couldn't find them all had to get them from the bank.
Frequently asked questions
Who pays tax for the closing day itself?
Under the standard agreement of purchase and sale commonly used in Ontario, the buyer. Check the adjustments clause in your agreement; if it has been changed, the agreement governs, and a lawyer can confirm.
Roughly how much extra does a buyer pay for property tax with a December closing?
Annual tax divided by 365, times the days from closing to December 31. Land transfer tax and legal fees are separate.
When will I see the statement of adjustments?
Your lawyer prepares it before closing, usually a few days ahead. Ask about anything that doesn't make sense.
Want advice for your own situation?
The closing date, how much tax the seller has paid and whether it's a new build all change the numbers. Tell me about your situation and I'll tell you straight what to do. Yifei (RE/MAX), efay.ai
Sources
- City of Toronto, buying, selling or moving: https://www.toronto.ca/services-payments/property-taxes-utilities/property-tax/buying-selling-or-moving/
- City of Toronto, property tax due dates: https://www.toronto.ca/services-payments/property-taxes-utilities/property-tax/property-tax-due-dates/
- City of Toronto, property tax: https://www.toronto.ca/services-payments/property-taxes-utilities/property-tax/