December 16, 2021
Today City Council approved details of the implementation of a Vacant Housing Tax, which will be levied on vacant properties from January 2022. The purpose of the tax is to help the availability and affordability of the housing stock on the market by creating a disincentive effect for owners to keep their dwelling unoccupied.
Council approved the implementation of this tax in July, and since then staff have conducted public consultations to create the recommended implementation details, including the bylaw, which will come into effect on Saturday, January 1, 2022. This will be the start of the first tax reference year — the period in which a property’s vacancy status will be used to determine whether tax is due. The vacancy tax becomes payable for the first time at the beginning of 2023, depending on the occupancy status during the previous year.
A dwelling will be considered vacant if it has been unoccupied for more than six months during the previous calendar year or if it is deemed vacant under the regulations. However, some exemptions include the death of the owner, homes under renovation, snowbirds, or if the owner is under medical care.
The tax rate will be set at one percent of the current value assessment (CVA) of the property for the year the home is vacant. Although the number of vacant homes in Toronto is not known until homeowner returns are submitted in 2023, using Vancouver’s tax parameters – assuming a vacancy rate of 1% of 800,000 residential units of Toronto, this could create approximately $55 to $66 million in annual tax revenue. The purpose of the tax is not to generate revenue, but rather to have more vacant properties made available for occupancy in order to improve housing supply. Council directed City staff to allocate all Vacant Home Tax revenues to affordable housing initiatives as part of the annual operating and capital budget approval process.
Owners will be required to declare the status of their residence each year. This will determine the occupancy status of the home and whether tax is payable. The responsibility for declaring the status of the property will lie with the homeowner, and failure to complete the declaration could mean that their home is considered vacant and subject to tax.
To ensure that compliance and tax payments are made as required, the City will conduct audits, and the by-law will contain provisions including penalties for non-payment, fines for various infractions, and a process for settling disputes.
Communications to owners will be rolled out early next year, outlining important obligations and due dates for reporting and payments.
The final report to Council is available here
“The vast majority of Toronto property owners will not pay this tax because their properties are not vacant, and the benefits will be felt throughout the city by increasing the availability and affordability of housing by creating more room on the housing market. We create policies that help people who work in Toronto to live in Toronto. And we’ve been working to make sure that any revenue generated from this change will help us create more affordable housing in our city for working families.
– Mayor John Tory
“This will make a real difference in improving Toronto’s housing stock. A vacancy tax can open up housing supply by making vacant housing available. For those who choose to keep residential properties vacant, revenue from the Vacant Housing Tax will support affordable housing projects in our city. Creating housing options for Toronto residents is the priority.
– Deputy Mayor Ana Bailᾶo (Davenport), Chair of the Planning and Housing Committee
“While the purpose of this tax is to change homeowner behaviors, any revenue collected can be directed towards funding more housing options for Toronto residents. While I think it’s going to change the behaviors of landlords who have vacant homes today – it’s pretty plain and simple – if you want to keep your house vacant, you’ll have to pay a tax.
– Gary Crawford (Scarborough South West), Chair of the Budget Committee
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