It’s that time of year again - Toronto’s vacant home tax - revisited
The Toronto Vacant Home Tax
It’s that time of year “again” - Let’s Revisit the Tax
Toronto Vacant Home Tax: Understanding Its Implications and Compliance
Toronto's evolving real estate landscape has introduced a significant policy: the Vacant Home Tax (VHT) in 2022. Aimed at addressing housing affordability and availability, this tax impacts property owners in the city who might have vacant residential properties. Here, we outline the key aspects of the VHT, its exemptions, and compliance requirements, to assist homeowners and investors in navigating this new terrain.
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Who Needs to Declare:
Every owner of a property within Toronto’s residential property tax class must annually declare the occupancy status of their property. This includes properties where the owner resides. Notably, the VHT does not apply to properties that are:
The principal residence of the owner or a permitted occupant.
Occupied by tenants, including business tenants.
Eligible for an exemption as outlined in the bylaw.
Defining a Vacant Property: A property is considered vacant if:
It wasn't the principal residence of the owner or permitted occupants, or wasn't occupied by tenants for six months or more during the calendar year.
It doesn't qualify for an exemption.
The owner failed to submit a declaration of occupancy status or required documentation.
Declaration Process: Declarations can be submitted through an online portal or by mail. This can be done by the property owner or an authorized representative. The City encourages the use of its secure online portal for quick and error-free submissions. Homeowners will need their 21-digit assessment roll number and customer number from their property tax bill or statement.
Tax Calculation and Payment:
For 2022 and 2023, a VHT of 1% of the Current Value Assessment (CVA) is levied on vacant residences. For instance, a property with a CVA of $1,000,000 will incur a $10,000 tax.
From 2024 onwards, the tax increases to 3% of the CVA. The same property would then be liable for a $30,000 tax.
The tax is calculated based on the previous year’s occupancy status and CVA.
Exemptions and Special Considerations:
The VHT makes allowances for owners away from their principal residence due to travel, work, or other reasons. The property must be the principal residence for at least six months of the year, regardless of physical occupancy.
For properties with multiple units under a single roll number, only one declaration is required. If at least one unit was occupied for six months or more, the property is considered occupied.
The introduction of the Vacant Home Tax in Toronto is a critical step towards optimizing the utilization of housing resources in the city. It encourages the active use of properties and contributes to addressing the housing shortage. Property owners must be diligent in understanding and complying with these regulations to avoid unnecessary taxation and contribute positively to the city’s housing landscape.
