City Council has approved a plan for the implementation of a new tax on vacant Toronto homes starting in 2022. The goal of the tax is to help with the availability and affordability of housing stock on the market by creating a disincentive for homeowners to keep their properties vacant.
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 by-law. 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. While the number of vacant homes in Toronto is currently unknown, 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. The City’s goal, however, is not to collect the tax, but to instead have more of the vacant properties converted into available housing options.
As part of the tax design, property owners will be required to declare the status of their residential home each year. This will determine the home’s occupancy status and whether the tax is payable. Homeowners will be able to make their declaration online or via mail. The responsibility to declare their property status is on the owner; not completing their declaration could have their unit deemed vacant and be subject to the tax.
Certain properties may be selected for audit, and if selected, the City will require the owner to 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 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.
City Council’s decision requires the enactment of a confirmatory bylaw for the plan to take effect.
“I’m happy to see Council approved a vacant home tax today. While a majority of Toronto property owners will not pay this tax, the benefits will be felt across the city by increasing the availability and affordability of housing supply. By opening up vacant homes to the housing market, either by renting or selling, we are signalling that if you work in Toronto and want to live in Toronto, we’re making housing available. For those who want to have properties sit vacant, you will pay a tax that helps us build more affordable housing.”
– Mayor John Tory
“Toronto needs housing options – plain and simple. This tax program has the ability to open up the housing supply by making vacant homes available – and if homeowners want to leave them vacant they can pay the tax which will fund housing projects in the city. Creating housing options for Toronto residents is the priority.”
– Deputy Mayor Ana Bailᾶo (Davenport), Chair of the Planning and Housing Committee
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