What You Need To Know About Toronto's Vacant Home Tax

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Payable beginning in 2023, there will be an annual tax on vacant Toronto residences. 

Here’s what you need to know about the Toronto Vacant Home Tax:

What is the Toronto Vacant Home Tax?

The Toronto Vacant Homes Tax is a tax imposed by the City of Toronto on residential properties that are left vacant for a period of more than six months in a year. The tax is aimed at increasing the city's housing supply by encouraging property owners to rent out their vacant properties.

When did the Toronto Vacant Home Tax go into effect?

The tax went into effect on January 1, 2022.

How much is the tax?

The tax is 1% of the property's assessed value per year. This means that if a property is assessed at $1 million, the tax would be $10,000 per year.

Who has to pay the tax?

The tax applies to owners of residential properties in the City of Toronto that are classified as vacant for more than six months in a year.

Are there any exemptions to the tax?

Yes, there are several exemptions, such as properties that are under construction, properties that are used as a primary residence for at least six months of the year, and properties that are owned by a person who is deceased or receiving long-term care.

How does the City of Toronto determine if a property is vacant?

The city will use a combination of self-reporting by property owners, utility records, and property inspections to determine if a property is vacant.

How will the tax revenue be used?

The tax revenue will be used to fund affordable housing initiatives in the city.

What happens if a property owner doesn't pay the tax?

Failure to pay the tax can result in penalties and interest charges, and the city may take legal action to collect the tax owed.

How can property owners avoid paying the tax?

Property owners can avoid paying the tax by either renting out their vacant properties or by occupying them for at least six months of the year.

What’s required from property owners and what is the purpose?

All Toronto property owners must submit a declaration citing their property’s occupancy status in the previous year, regardless of whether they are currently living at the property or not. 

The City of Toronto has implemented the Vacant Home Tax (VHT) in an effort to address the housing shortage and increase housing supply by deterring property owners from leaving residential properties vacant. The hope is that owners will be discouraged from doing so because of the additional tax they will now be required to pay for properties left vacant. 

Who is exempt from Toronto’s Vacant Home Tax? 

Regardless of exemption eligibility, all property owners are required to submit the declaration on their property’s occupancy status, but there are certain conditions under which the tax will not apply, such as: 

• Properties that represent the principal residence of a tenant or occupants
• Properties that are the principal residence of the homeowner
• Properties that are eligible for exemption under specific conditions (a full outline of the new bylaw is available here) 

How is the Vacant Home Tax calculated? 

According to the City’s official website, these are the Vacant Home Tax calculation details provided: 

A Vacant Home Tax of one per cent of the Current Value Assessment (CVA) will be imposed on all Toronto residences that are declared, deemed or determined vacant for more than six months during the previous year. For example, if the CVA of your property is $1,000,000, the tax amount billed would be $10,000 (1% x $1,000,000).

The tax is based on the property’s occupancy status for the previous year. For example, if the home is vacant in 2022 the tax will become payable in 2023.

How to submit your declaration

Homeowners will need their 21-digit assessment roll number and customer number located on the property tax bill/property tax account statement. These declarations should be submitted via the City’s online (secure) portal. There is also the option of a paper declaration form. Please ensure you are aware of deadlines for submission to avoid any penalties or fines and assumed vacant status of your property. Forms must be complete and it is the responsibility of the property owner to ensure they are aware of delivery times via Canada Post to avoid late submissions. The deadline for the 2022 submission has been extended to February 28, 2023. 

Where is my Vacant Home Tax money going? 

The revenues from the Vacant Home Tax will be put toward initiatives for affordable housing.

For full details, resources and links pertaining to Toronto’s Vacant Home Tax, please refer to the City of Toronto’s official website. 

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