Vacant Home Tax in Toronto – What You Should Know?

The Vacant Property Tax Amount in Toronto

The city of Toronto imposed the vacant home tax for properties in 2023. Since January 1, 2023, any residential property in the city sitting vacant for more than 6 months of any calendar year will have to pay the vacant home tax. An example of a scenario would be if the tax is calculated at 1% of the property’s assessed value. This means that if the vacant property is valued at a million dollars and has been unoccupied for more than 6 months in a calendar year, the vacant home tax on it will be a staggering $10k. For 2024 and future taxation years please check the City of Toronto Vacant Home Tax website.

Why Is the Vacant Property Tax in Place and Who Pays It?

The main focus of imposing this vacant home tax might have been to ensure more properties get occupied. Also, this is a plea to help curb the current housing crisis in the city and region. However, homeowners living in their home for the whole year shouldn’t dismiss this tax that easily too.

You have to proactively make a declaration to the city to avoid the tax. Use the City of Toronto’s portal anytime to make your declaration and avoid this tax being imposed. Also failing to submit on time may result in a fine of $250. So, the city is pretty serious about the vacant home tax.

This tax applies to both owner-occupied and rental properties. You just have to be living in the property for more than six months of a year to avoid the tax. Also, not being able to find renters will not let property owners off the tax as well.

Keeping all of this in mind, it is easy to see that if a property remains empty for more than half a calendar year, the owner will have to pay the tax.

Some Exceptions to the Vacant Property Tax in Toronto

The watertight vacant home tax rules are applied to everyone in the city. However, there are some exceptions for people with extraordinary circumstances. You will not have to pay the hefty vacant property tax if:

Your property is being renovated and is not in a state to live in during the construction process.
You have been admitted to a hospital for treatment for a long term.
The owner of the property has been deceased.
The property is under a court order that prohibits someone from living in it.
The property is in the process of being transferred to a new owner.

For further information you can find it at the city of Toronto vacant home tax website, as well.

Can I Tell Them My Property Was Occupied When in Reality, It Wasn’t?

Quite frankly, this is a fraud with the local government. Doing this, you could face some hefty fines when caught. However, the way the city will enforce this law hasn’t come out yet in detail. What we can tell is the fact that declarations might be audited. In case your declaration gets audited, you will have to prove to the authorities that someone has been living on the property.

Is There a Need for This Vacant Home Tax in Toronto?

We need to evaluate this question in detail. Consider the dire housing crisis Toronto and other major cities in Canada are going through. People just buy a property to save up the money. If this keeps happening on a larger scale, the city will be left with many vacant homes and apartments. This is never good for a rapidly growing city like Toronto.

So, by imposing this vacant home tax, the City of Toronto is trying to get more people settled in. This can free up more rental properties boosting availability and affordability in the city. Discouraging people from leaving their properties vacant has many other benefits as well. Also, financially, the city sees many advantages from the imposed tax.

A similar tax situation was introduced in Vancouver in 2017. It led to many properties being freed up for rentals over the following five-year period.

Trust Condos Can Help

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The information on this blog is based on our experience. Readers/Users are strongly recommended to obtain independent property, mortgage, legal, tax or accounting advice. The information displayed is for reference only and is without any representations and warranties.