All taxes are not equal in the eyes of a lender
Property Taxes. Income taxes. GST. These are all taxes, but to a lender they’re treated differently.
In simplest terms, the lender is concerned about taxes that can rank ahead of their mortgage in priority. That’s because, unless they’re seriously in arrears, they’re not disclosed on a title search. So a mortgage could be registered in 1st priority, but have other financial charges attached to the property that rank ahead of the mortgage.
Property Taxes: These can rank ahead of a mortgage, so you can expect the lender to insist that they’re current at funding and to require proof of payment each year.
Income Taxes: These typically do not form a priority over a mortgage, so lenders may be more flexible in how they are treated.
GST: For business-for-self borrowers, GST can rank ahead of the mortgage, so like property taxes, you can expect the lender to insist that these are current at closing.
If taxes look to be an issue for your borrower, bring them up at the beginning of the application process so that you can work with the lender to find a solution that will allow the deal to close.