Vacant Home Tax Toronto

Housing in Toronto has been a point of contention for a while now, with sky-high housing prices, low availability of affordable housing, and the consistent approval and development of new condos. With the struggles endured by Torontonians throughout the COVID-19 pandemic, this problem has only been exacerbated. As such, Toronto’s City Council has announced the introduction of a new vacant homes tax and bylaw. This article includes the details made available so far.

On July 15, 2021, Toronto City Council approved a plan for the implementation of a new tax on the city’s vacant homes beginning in 2022. A vacant home refers to one unoccupied for more than 6 months within the last calendar year or is deemed vacant under the new bylaw. Some exceptions to what is considered ‘vacant’ include the death of an owner, homes under renovation, snowbirds’ homes, or homes where the owner is in medical care.

Figure 1 – Toronto Homes

According to the City of Toronto, this decision is meant to help with the availability and affordability of Toronto’s housing stock and could generate somewhere between $55 and $66M in taxes per year. As part of this plan, property owners will be required to declare the status of their residential home each year, determining the home’s occupancy status and whether the tax is payable. The responsibility to declare a property is on the owner and will be available for completion online or via mail.

The initial tax rate shall be set at 1% of the property’s current value assessment (CVA) for the year in which the home is vacant. An official report and tax bylaw are in the works and are expected to be available for City Council review by the end of 2021. The bylaw is expected to come into effect on January 1, 2022. The tax on these vacant homes will become payable for the first time in early 2023, based on the occupancy status reported during the previous year.

Figure 2 – Vacant Home

Toronto Mayor John Tory commented on the tax and bylaw, “I’m happy to see council approved a vacant home tax today. While a majority of Toronto property owners will not pay this tax, the benefits will be felt across the city by increasing the availability and affordability of housing supply.” Additionally, he states that the tax will help build more affordable housing in the city.

The policy aims to increase the availability and affordability of the housing supply by creating a disincentive for owners keeping properties vacant. By simply announcing the tax start date of January 1, the city hopes owners will seek out tenants to avoid paying. Startup costs for implementation are estimated at $11M, with annual operating costs estimated at $3.1M.

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