Today, City Council approved the implementation details of a Vacant Home Tax, which will be levied on vacant properties starting in January 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.
Council approved the implementation of this tax in July, and since then staff have conducted public consultations to create the recommended implementation details, including the bylaw, which will come into effect on Saturday, January 1, 2022. This will be the start of the first tax reference year — the period during which the vacancy status of a property 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, some exemptions include death of the owner, homes under renovations, snowbirds, or if the owner is in medical care.
The tax rate will be set at one per cent of the property’s current value assessment (CVA) for the year the home is vacant. While the number of vacant homes in Toronto will not be known until owner declarations have been submitted in 2023, using Vancouver’s tax metrics – assuming a one per cent vacancy rate of Toronto’s 800,000 residential units, it could create approximately $55 million to $66 million in tax revenue annually. The goal of the tax is not to generate revenue, but rather to have more vacant properties made available for occupancy to improve housing supply. Council directed City staff to allocate any Vacant Home Tax revenues towards affordable housing initiatives through the annual operating and capital budget approval process.
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. The responsibility to declare the property status will be on the owner, and failing to complete the declaration could mean their home is deemed vacant and be subject to the tax.
To ensure compliance and tax payments are being made as required, the City will conduct audits, and the bylaw will have provisions including penalties for failure to pay, fines for various offences, and a dispute resolution process.
Communications to property owners will be rolled out early next year, outlining obligations and important due dates for declarations and payments.
The final report to Council is available here
“The vast majority of Toronto property owners will not pay this tax because their properties are not vacant, and the benefits will be felt across the city by increasing the availability and affordability of housing by creating more room in the housing market. We are creating policies that help the people who work in Toronto, live in Toronto. And we have worked to ensure any revenue generated from this change will help us create more affordable housing in our city for working families.”
– Mayor John Tory
“This will make a real difference in improving Toronto’s housing stock. A Vacant Home Tax can open up the housing supply by making vacant homes available. For those who choose to keep residential properties vacant, the revenue from the Vacant Home Tax will support affordable housing projects across our City. Creating housing options for Toronto residents is the priority.”
– Deputy Mayor Ana Bailᾶo (Davenport), Chair of the Planning and Housing Committee
“While the goal of this tax is to change the behaviours of property owners, any revenue collected can be allocated to funding more housing options for Toronto residents. While I believe this will switch the behaviours of property owners who have vacant homes today – it’s pretty plain and simple – if you want to keep your home vacant, you’ll have to pay a tax.”
– Gary Crawford (Scarborough Southwest), Chair of the Budget Committee
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