Toronto's Vacant Home Tax and the Federal Underused Housing Tax Explained

Toronto's Vacant Home Tax Explained

In 2022, the City of Toronto introduced the Vacant Home Tax to boost housing availability by discouraging empty properties. This tax mandates homeowners to report their home occupancy annually.

How Much is the Vacant Home Tax?

As of January 1, 2024, Toronto increased the Vacant Home Tax from 1% to 3%. Properties vacant for over 6 months in the previous year are taxed at 3% of the Current Value Assessment (CVA), used by the city for property tax calculations. Note that CVA might differ from the market value.

The Vacant Home Tax Notice is issued in late March, with payments due in three installments in May, June, and July.

Example: If your property's CVA is $1,000,000 in 2024 and remains vacant for at least 6 months, the Vacant Home Tax will be $30,000, payable in 3 installments in 2025.

When is a Property Considered Vacant? According to Toronto's bylaw, a property is vacant if it wasn't the owner's principal residence, wasn't occupied by a tenant for 6 months, is ineligible for exemptions, or if the owner didn't declare occupancy.

Declaring Occupancy in Toronto You can declare occupancy online or by mail using the 21-digit assessment roll number and customer number from your property tax bill.

Exemptions Numerous exemptions to the Vacant Home Tax exist, such as for snowbirds, extended-stay travelers, co-ops, the death of an owner, uninhabitable homes due to renovations, hospital stays, and homes sold during the previous year. Check the city's website or contact them for specific situations.

Federal Underused Housing Tax

Introduced in 2022, the federal Underused Housing Tax is currently 1%. It applies to residential properties owned by foreign nationals or individuals who own property through a trust, partnership, or corporation incorporated outside of Canada.

Exemptions to Federal Underused Housing Tax Exemptions include primary residence, occupancy by a qualifying occupant for 180 days, or using the home as a vacation property in an eligible Canadian area for at least 28 days.

For detailed information, consult the Canadian government's website or seek advice from your accountant.

Do I Have to Pay Both Taxes? Depending on your situation, you might have to pay both the Toronto Vacant Tax and the Federal Underused Housing Tax. For instance, if you own a vacant Toronto property, are not a Canadian citizen or permanent resident, and don't qualify for exemptions, you'll need to pay both the 3% Toronto tax and the 1% Federal tax.

Disclaimer: The information provided in this content is for general informational purposes only and should not be construed as financial or taxation advice. It is not intended to substitute for professional advice, and readers are encouraged to consult with qualified financial or tax professionals for guidance tailored to their specific circumstances. The author and publisher are not liable for any actions taken based on the information presented in this content. More info: City of Toronto & Government of Canada