Many people face financial hardships throughout their life and become unable to pay the government the tax money they are owed. Tax arrears is money that is owed to the government and should have been paid previously. If taxes are left unpaid for too long the Canada Revenue Agency (CRA) will take measures to reclaim what they are owed. If you are unable to come up with the money to pay off the CRA, you may want to consider speaking to a mortgage professional on our team. The team at Mortgage Broker Store have years of experience in helping people who are in arrears on taxes or on their mortgage.
What Can the CRA Do Reclaim Tax Arrears?
Before attempting to reclaim the debt, a representative from the CRA will contact you about your situation. If you are unable to pay in full, the CRA representative will likely suggest a payment plan. They will allow you to make small monthly payments to gradually pay off the tax debt plus interest. If you refuse to make any sort of payments or refuse to communicate with the CRA they will arrange to take what money is owed without your involvement. The CRA has a variety of methods to reclaim tax arrears and will select a particular method depending on different factors. A very common method used by the CRA is to garnish your wages. This means that the CRA asks your employer to redirect a portion of your wages to pay off the tax debt. For larger tax debts, the CRA can put a lien on your home. A lien is a debt that is registered against a property much like a mortgage and must be paid out if the property is sold. In the most extreme cases, the CRA can decide to sell your property to reclaim tax debts. Properties that are sold in this way are said to be sold under a Sheriff Land Tax sale or a Sale of Land for Tax Arrears. The Ontario government publishes properties up for sale for tax arrears, and the monthly listings can be found at the website for The Ontario Gazette.
Potential Solutions for Tax Arrears
If you are unable to come to a solution with the CRA, then it is in your best interest to pay off the tax arrears before the CRA makes efforts to reclaim the money. Typically a bank or other large institutional lender will not advance money to people who have a large tax debt. In order to borrow the money required to pay off tax arrears, you may require the services of a private mortgage lender. Private mortgage lenders can approve a mortgage regardless of a person’s credit history, provided they have sufficient equity in their house. Most private lenders in Ontario are able to lend up to 75% of a property’s value. For example, for a house in Toronto that can sell at $1,000,000 and has an existing first mortgage of $500,000, a private lender can provide a second mortgage of up to $250,000. If you do not have enough equity in your property to qualify for a private lender mortgage, then you may want to consider selling your house. By selling the property yourself, you can hire your own real estate agent to properly market the property and you can evaluate any offers that come in. Generally, properties that sell in a Sale of Land for Tax Arrears sell at a discount, and the homeowner can earn far more money by selling the property themselves. It is also important to know that tax arrears in Ontario carry an extremely high-interest rate, and it is usually in a person’s best interest to pay off the tax arrears before the interest begins to accumulate.
How a Mortgage Broker Can Help
Our team of mortgage professionals has decades of experience in helping people with tax arrears. We take the time to analyze your situation and recommend solutions that are most beneficial to you. We have a large network of private lenders that are ready to provide quick financing to people with tax arrears. In the case where a mortgage is not possible, we can create a plan for you to sell the property and get the largest amount of money in the long term. In some cases, it may be necessary to enter bankruptcy or a consumer proposal, and in these cases, we can recommend the best professionals for the job. If you’d like a free consultation on your situation, you can contact our team at 416-499-2122 or via email at email@example.com