The TIPPs Program
First-time Home Buyer Knowledge Base
Most lenders require borrowers to enroll in a TIPPs Program or include it as part of the mortgage payment to ensure property taxes remain current. Tax Installment Payment Plans are available in many of British Columbia’s cities and districts. The TIPP Program is a real boon to residents of the larger metropolitan areas such as Vancouver, Burnaby, Coquitlam, Abbotsford, Delta, Langley, Aldergrove and Surrey. The primary cities of Vancouver Island—Sidney, Courtenay, Victoria and Nanaimo all have TIPP programs available for property owners as well.
What Makes TIPP a Good Thing?
Most home owners find property taxes one of the most difficult things to save for. There are just so many different emergencies that come up. Mortgage lenders know this, which is why they either require borrowers to pay an estimated payment into a mortgage payment, or they require proof that the borrower is signed up in a TIPP program in the city of residence.
How Does the TIPP Program Work?
TIPP payment dates vary from city to city in BC. You’ll have to check the particulars in your location. In some districts, automatic payments run from August through May. In this scenario, June is the month that the final payment for the year is calculated, with payment due by July 1st.
Other cities begin payment plans in January and adjust payments on June 1st to compensate for any increase or decrease in taxes that may have occurred.
The date of automatic withdrawal from your financial institution can vary as well. Some locations use the 1st of the month. Others prefer the 15th.
The program is free when you join at the correct time for your area. Otherwise, there is typically a 2% filing fee that is calculated against any installments you would have paid between the first date in the cycle and the date you sign up.
TIPP payment plans are transferrable, so if the seller is on TIPP, you’ll be able to assume the property tax payments. One of mortgage brokers would be happy to assist you with arranging the transfer of the account to your name and financial institution.
How TIPP Makes Adjustments to Your Property Tax Installment
Property taxes are different every year. In British Columbia, annual property tax assessments are delivered in May. Differences between what you paid the previous year and what is due for the current year can change the amount you owe.
In cities and districts where the tax cycle begins in January, tax decreases result in your monthly installment continuing unchanged until your property taxes are paid off. If the tax has increased, your monthly installment will be increased automatically to compensate for the higher amount due. In these cities and districts, accounts are reviewed in December. If you have a balance you will be notified and payment must be arranged.
In districts where they use a 10-month payment plan that coordinates with the release of property tax assessments in May, the process is much simpler. The balance owing on the taxes is either due in July or the property owner may choose to carry any overpayment forward against the next year’s taxes and lower the monthly installments.
Impact of Supplementary Taxes
When a building or residence is complete, or a renovation increases the value of the property, additional taxes are assessed. The property owner receives a supplementary tax bill, and his or her TIPP payments are recalculated to reflect the increased property taxes due. The size of the increase depends on how many more months there are before July in the upcoming year.
Important Information about TIPP Participation
- Anyone with a bank account may participate in TIPP. Debit cards that draw directly from bank funds are allowed. Line of Credit and credit cards are not allowed as payment sources.
- All that’s required to participate in addition to this is a filled out application and a void cheque.
- It takes two weeks to change bank information, stop withdrawals if you sell your property or to cancel the program for any other reason.
- If you withdraw from the program or cancel your participation in the plan, the balance of taxes are due and payable. You will also have to pay any penalties stipulated by the Penalty By-law.
- If you miss a payment (such as failing to have sufficient funds in your account), the city or district may cancel the agreement and demand the balance of taxes immediately.
If you have questions about the TIPP program, please contact us today.
