Vacant Home Tax

In 2019, City Council asked for information related to the possible implementation of a vacant home tax in Toronto. At their December 2020 meeting, City Council asked City staff to develop key tax design features and administrative structures to support a vacant home tax program and to report back with a recommended design for a vacant home tax by the end of the second quarter of 2021, for tax implementation in 2022.

The goal of a vacant home tax is to change the behaviours of homeowners who leave their homes unoccupied – compelling them to sell or rent them out to increase the housing supply or pay a tax to keep them vacant.

At its meeting on July 14-15, 2021, City Council approved the development and implementation of a vacant home tax in Toronto. A final report and tax bylaw will be prepared for Council’s review by the end of 2021.

A tax will be imposed on vacant Toronto residences, payable beginning in 2023. Homeowners who choose to keep their properties vacant will be subject to this tax.

Here’s how it works:

  • All property owners will be required to self-declare the status of their residential home(s) each year. This will determine the home’s occupancy status and whether the vacant home tax is payable. Nothing further is required of property owners living in their own homes.
  • If a property owner declares their home(s) vacant, they will be required to pay a tax at one
    per cent of their home’s Current Assessed Value (CVA).
  • The tax is based on the property status from the year before – meaning if the home is vacant in 2022, the tax will become payable in 2023.

A unit is considered vacant if it has been unoccupied for more than six months during the previous calendar year, and the unit is not the principal residence of the owner, or it is deemed to be vacant under the by-law. Some exemptions may apply.

Exemptions

There are a number of circumstances where a home may be vacant for an extended period of time.

The by-law, to be passed later this year, will detail the full list of exemptions, including:

  • death of a registered owner
  • property undergoing redevelopment or major renovation
  • property of the owner in care
  • rental restriction or prohibition that prevents the unit from being occupied
  • transfer of legal ownership of property during the year
  • occupancy for full-time employment
  • court order

Principal residences may be left unoccupied for periods of time without being subject to the tax, which would offer protection from the tax to most snowbirds.

Audits

Certain properties/declarations may be selected for audit on a random or specific criteria basis. If selected for audit, the City will require the owner to provide information and evidence to substantiate their claim.

In order to ensure compliance and tax payments are being made as required, the tax will include provisions for penalties for failure to pay and fines for various offences, along with a dispute resolution process.

Fees and penalties will be set out in the by-law later this year.