Toronto Vacant Home Tax
The Toronto Vacant Home Tax
For more information or to file your disclosure please click here
All residential property owners in Toronto will be required to submit a declaration of their property’s occupancy status for the previous year. The deadline to declare a property’s 2022 occupancy status is February 2, 2023. The online declaration portal will open in mid-December 2022.
What is the Vacant Home Tax
An annual tax will be levied on vacant Toronto residences, payable beginning in 2023.
A property is considered vacant if it has been unoccupied for more than six months during the previous calendar year or is otherwise deemed to be vacant under the bylaw .
The goal of the City of Toronto’s Vacant Home Tax (VHT) is to increase the supply of housing by discouraging owners from leaving their residential properties unoccupied. Homeowners who choose to keep their properties vacant will be subject to this tax.
Revenues collected from the Vacant Home Tax will be allocated towards affordable housing initiatives.
How It Works
Mandatory Declaration of Occupancy Status
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 or someone acting on behalf of the owner. The declaration will determine whether the Vacant Home Tax applies and is payable.
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.
Vacant Home Tax Calculation
A Vacant Home Tax of one percent 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 Declare
To make a declaration you will need your 21-digit assessment roll number and customer number from your tax bill or property tax account statement.
Declarations of occupancy status should be made through the City’s secure online declaration portal that will open in mid-December 2022. If required, homeowners can receive a paper declaration form by contacting 311. The paper form must be completed in full and received by the City of Toronto before the deadline to avoid being issued a fine and having your property deemed vacant. Incomplete forms will not be accepted. Please be aware of Canada Post delivery times.
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.
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.
Owners of properties subject to the tax will be issued a Vacant Home Tax Notice in March/April and payment will be due on May 1.
Residential properties will be deemed vacant if the owner fails to make the annual declaration by the deadline and/or provide supporting documentation.
If there is an error in the declaration you submitted, you can:
submit a new declaration prior to the February 2 declaration deadline
file a Notice of Complaint if it’s after the declaration deadline
Failure to declare or making a false declaration may result in a fine of $250 to $10,000.
Types of Property Disclosures
Occupied as principal residence of Homeowner
As the homeowner, you occupy the residential property for six months or more throughout the taxation year. You may only have one principal residence.
Subject to Vacant Home Tax = No
Occupied as Principal Residence of a Permitted Occupant
A person(s) that is authorized by the registered owner to occupy a residential property as their principal residence for six months or more throughout the taxation year. A permitted occupant is not a tenant or subtenant. A permitted occupant may include but is not limited to a family member or a friend of the registered owner.
Subject to Vacant Home Tax = No
Occupied as a Tenanted Property
A property that is occupied by a person(s) that has a written tenancy agreement for a term of at least 30 days to occupy the residential property as their principal residence. The property must be occupied by one or more tenants for six months or more throughout the year.
Subject to Vacant Home Tax = No
Vacant with an Eligible Exemption
A residential owner may declare the property vacant with an eligible exemption. Please see the Exemptions section for further details.
Subject to Vacant Home Tax = No
Vacant or deemed/determined vacant
A property can be “declared” vacant by the homeowner through their property status declaration. A property will be “deemed” vacant if the owner fails to make a property status declaration. A property that has been selected for audit, or on review for a Notice of Complaint or appeal can be “determined” to be vacant upon completion of the review.
Subject to Vacant Home Tax = Yes
Exemptions
A property may be left vacant and be exempt from the Vacant Home Tax if one of the following criteria is met:
Death of a Registered Owner
The property was vacant for six months of more in the previous year due to the death of an owner.
Supporting Documentation = Copy of Death Certificate
Repairs or Renovations
The vacant property is undergoing repairs or renovations, and all the following conditions have been met:
Occupation and normal use of the vacant property is prevented by the repairs and renovations;
all necessary permits have been issued for the repairs and renovations;
the City’s Chief Building Official is of the opinion that the repairs or renovations are being actively carried out without unnecessary delay.
Supporting Documentation = Description of the type of project preventing occupancy and/or copy of building permits issued related to the repairs and renovations
Principal Resident is in Care
The principal resident of the vacant property is in a hospital, long term or supportive care facility for up to six months during the taxation year. This exemption may be claimed for up to two consecutive taxation years.
Supporting Documentation = Signed letter from health care facility on letterhead
Transfer of Legal Ownership
You purchased your property in the previous year, and the sale involved a 100 per cent transfer of an interest in the property to an unrelated individual or corporation. This excludes name changes, adding a second owner and removing a second owner.
Supporting Documentation = Copy of Land Transfer Deed
Occupancy for Full-Time Employment
The vacant property is required for occupation for employment purposes for a total of at least six months in the taxation year, by its owner who has a principal residence outside of the Greater Toronto Area.
Suppporting Documentation = zzProof of residency outside of Greater Toronto Area and/or signed letter from employer on company letterhead or employment contract
Court Order
There is a court order in force which prohibits occupancy of the vacant property for at least six months of the taxation year.
Supporting Documentation = Copy of Court Order
Paying the vacant home tax
Please visit the city of Toronto website to learn more about the payment options for this tax. Additionally, please click the following link to learn more. Click here to head to the city of Toronto website
Change of Ownership and The Vacant Home Tax
The Vacant Home Tax has implications for property transactions, both for purchasers and vendors:
It is the responsibility of purchasers and vendors to make the appropriate arrangements to ensure that the declaration has been filed.
The Vacant Home Tax will form a lien on the property, and any unpaid taxes will become the purchaser’s responsibility.
If a closing occurs between January 1 and the closing of the declaration period on February 2, the vendor must complete the declaration prior to the closing, as only the vendor will know the property’s occupancy status for the prior year.
If a closing occurs after the declaration period – February 3 to December 31 – the purchaser must submit a declaration in the following year. The purchaser qualifies for the “transfer of legal ownership” exemption.
Vendors should provide a copy of the completed and filed property status declaration to the purchaser.
Vendors should provide a statutory declaration at closing confirming the filed property status declaration is true and correct.
Audits
A property status declaration 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 of occupancy of a residential property or any exemption.
Supporting Documentation
You may be required to submit supporting documentation or evidence with your declaration, or if your property status declaration is audited. This may include but is not limited to copies, including certified copies, of:
Ontario vehicle registration and vehicle insurance documentation of any occupant and owner.
Government-issued personal identification, including driver’s license and Ontario Identity Card of any occupant and owner.
Proof of Ontario Health coverage or valid Health card of any occupant and owner.
Income tax returns and income tax notices of assessment of any occupant and owner.
Lease agreements for the residential property.
Wills, grants of probate, or grants of administration in respect of an owner or an owner’s estate.
Employment contracts, pay statements or records of employment of any occupant and owner.
Verification of residence in hospital, long-term or supportive care facility in respect of an owner.
Court orders prohibiting the rental of the residential property.
Insurance certificates for homeowner’s or tenant’s insurance.
Statutory declarations or affidavits regarding the occupancy of the residential property and any exemption.
All records and documents pertaining to the occupation of the residential property or any exemption claimed must be retained for a period of three years.
Notice of Complaint
If you disagree with the Vacancy Tax Notice or Supplementary Assessment, you may file a Notice of Complaint to have the City review your property’s status. Your complaint must be received within the following time frames:
Vacancy Tax Notice: On or before the 10th business day of April in the year following the date that payment was due.
Supplementary Notice: Within 90 days of the date on your Supplementary Notice.
Your Notice of Complaint can be submitted through the online portal and must include:
Assessment roll number and customer number.
Complainant’s full name and contact details (telephone number or email).
If you are a complainant acting on behalf of the owner, include information regarding your relationship to the owner and your authority to act on their behalf.
Reason(s) for the complaint and why the residential property should not be subject to the tax.
Supporting documentation and evidence to substantiate the reason(s) for the complaint.
You may be asked to provide additional information or documentation in relation to your complaint. Failure to provide the additional information will result in your complaint not being considered. Once all required information and evidence is received, the City will provide a response in writing within 30 days from the date the determination is made.
Appeals
If you disagree with the decision made on your Notice of Complaint, you will have 90 days to submit an appeal request. An appeal is limited to the same issues raised in your initial complaint unless the outcome of your complaint resulted in a reassessment or varied assessment.
Your Appeal can be submitted through the online portal and must include:
Assessment roll number and customer number.
Requestor’s full name and contact details (telephone number and/or e-mail address).
If you are acting on behalf of owner, include information regarding your relationship to the owner and your authority to act on their behalf.
Statement of the grounds on which the appeal is based and why the residential property should not be subject to the tax on the grounds of the appeal.
Supplementary information and evidence to substantiate the grounds for the appeal.
Upon receipt of your appeal request, your submission will be reviewed within 90 days by the Appellate Authority. The Appellate Authority will make a determination to allow or dismiss the appeal in whole or in part.
Following the determination the City will vacate, vary or reconsider the assessment within 30 days. The appeal decision is final.
Background
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.
At its meeting on July 14-15, 2021, City Council approved the development and implementation of a vacant home tax in Toronto. At its meeting on December 15, 16 and 17, 2021, City Council amended the City of Toronto Municipal Code, adding Chapter 778, Taxation, Vacant Home Tax .
Disclaimer
We strongly urge you to visit the city of Toronto website dedicated to this tax for more information regarding the Vacant Home Tax. Our team are not tax professionals and are not in a position to provide advice. The information provided above and in reference to the City of Toronto Vacant Home Tax is provided by the city of Toronto and has been posted here to provide awareness to our clients, customers and general public. Please click the link below to be forwarded to the city of Toronto site for more information.
