June 11, 2015

As a homeowner, one of the expenses you need to take into account each year are your property taxes. You probably don’t give it much thought because your financial institution remits them for you.

What many homeowners may not recognize is that you have a choice on how to pay your property taxes.

Pay them directly to the municipality or,
Have them paid by your financial institution who gathers the taxes owing from you by including them in with your mortgage payment

When you have a mortgage, you have the option of paying your property taxes through your lender via your mortgage payment, who will then remit them to the municipality. This may seem like the more convenient option, but you could be missing out on potential growth on your money. Here’s how lenders make life convenient for you and benefit from it:

The financial institution of your choice who holds your mortgage and remits the taxes for you collects those taxes in a blended mortgage/taxes payment. The mortgage and interest gets paid and the tax collected goes into a separate account. The bank then remits your tax payment quarterly on your behalf to the municipality from that separate account. However, tax rates tend to rise year after year and your financial institution has no idea what the taxes will be for next year, so they run a surplus and ask you to overpay your taxes. By doing this, the financial institution doesn’t get caught off guard next year at the first remittance date and have to come to you for more money. Our question to you is, why do you allow them to have your money before you have to give it up to the tax man? Surely you don’t think that they don’t have that separate account invested some way to get that money working for them? Why should you allow them to do that and keep that growth on your money? Yes they will eventually pay it out the principle that you gave them but in the mean time they get to profit on returns generated on your money. Why them and not you?

Let’s talk about how we can help you discover ways to benefit from remitting your own property taxes. We can help you develop a plan that will allow you to keep your money down to the last day before you have to pay it out and keep the growth on that money that should be yours to begin with. Eventually you will be in the position that you won’t have that financial institution there to remit your taxes for you and you’ll have to do it yourself each quarter. Please contact us to explore this and other tactics that can really help you. We’ll be glad to help.

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