City of Toronto Vacant Home Tax
Did you know that an annual tax will be levied on vacant Toronto residences, payable beginning in 2023. This is known as the City of Toronto’s Vacant Home Tax.
A property will be considered vacant if it has been unoccupied for a total of six months during taxation year (previous calendar year) or is otherwise deemed to be vacant under the bylaw. Also, a property will be deemed a vacant unit if the owner fails to make the declaration or fails to provide information or evidence demanded by the City, and the failure is not reversed by way of a complaint or appeal. Simply put, failing to make the declaration required by the City of Toronto will result in a residential unit being deemed vacant and will result in a vacant home tax.
By-Law 97-2022 was enacted and passed on February 3, 2022. It is deemed to have come into force on January 1, 2022. All Toronto residential property owners must submit a declaration of their property’s 2022 status by February 2, 2023. The declaration portal is open and can be accessed here: https://www.toronto.ca/services-payments/property-taxes-utilities/vacant-home-tax/?accordion=exemptions
All residential property owners in Toronto will be required to declare the status of their property(s) annually, even if they live there. Declarations must be made by the homeowner. The declaration will determine whether the vacant home tax applies and is payable. For residential properties that are occupied, but not by the homeowner(s), owners will be required to submit information about tenants and/or permitted occupants when making the declaration.
Principal residences may be left unoccupied for periods of up to a total of six months throughout the taxation year without being subject to the tax. For residential properties declared as vacant for six months or more during the taxation year and without an eligible exemption, owners will be required to pay the vacant home tax.
An eligible exemption under the bylaw is:
Amount of Tax
Every owner of a vacant unit and every owner of a deemed vacant unit shall pay tax in the amount of 1% of the current value assessment of the residential unit. This will be the amount shown on the most recent returned assessment roll as of the payment date.
Change of Ownership and the Vacant Home Tax
The vacant home tax has implications for property transactions, both for purchasers and vendors.
There are provisions that allow a homeowner to file a Notice of Complaint to have the City review the property’s status.
One of the reasons the City of Toronto has taken this initiative is to discourage owners from leaving their residential properties unoccupied. Homeowners who choose to keep their properties vacant, subject to the exemptions above, will be subject to this tax.