vacant home tax

Toronto city council approves plan for vacant home tax

Tuesday, July 20, 2021

The new vacant home tax in Toronto will take effect in 2022.

Toronto city council approved a plan to curb homeowners from keeping their properties empty as the availability and affordability of housing stagnates. The tax is expected to fund housing options and open up supply.

A bylaw supporting this tax will come into effect on Saturday, January 1, 2022, becoming the start of the first tax reference year – a period during which the vacancy status will be used to determine whether the tax is payable. The tax on vacant homes becomes payable for the first time in early 2023, based on the occupancy status during the prior year.

A home will be considered vacant if it has been unoccupied for more than six months during the previous calendar year, or it is deemed to be vacant under the bylaw. However, there are some exemptions, including death of the owner, homes under renovations, snowbirds or if the owner is in medical care.

The initial tax rate will be set at one per cent of the property’s current value assessment (CVA) for the year in which the home is vacant. Using Vancouver’s tax metrics (assuming one per cent of Toronto’s housing stock is vacant), at a tax rate of one per cent on the average Toronto home’s current assessed value, it could generate between $55 to $66 million in tax revenue per year.

Declaring status of home

Property owners will be required to declare the status of their residential home each year, online or via mail. This will determine the home’s occupancy status and whether the tax is payable. Not completing the declaration could signal a unit is vacant and, therefore, subject to the tax.

Certain properties may be selected for audit. If selected, the owner must provide information and evidence to establish whether the home was vacant or occupied during the reference period. To ensure compliance and tax payments are being made as required, the vacant home tax will include provisions including penalties for failure to pay, fines for various offences, and a dispute resolution process.

A final report and tax bylaw will be prepared for council’s review by the end of 2021. The decision requires the enactment of a confirmatory bylaw for the plan to take effect.


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