Understanding Toronto’s Vacant Home Tax: A Complete Guide

In an effort to increase the availability of rental housing and reduce the number of vacant homes, the city of Toronto has implemented a Vacant Home Tax (VHT). This tax applies to residential properties that have been vacant for six months or more during the calendar year. Let’s dive into the details of this tax and what it means for homeowners.

What Is the Vacant Home Tax?

All homeowners in Toronto are required to declare the occupancy status of their property annually, even if they reside there. The Vacant Home Tax does not apply to properties that are the principal residence of the owner, the principal residence of a permitted occupant, occupied by a tenant, or properties that qualify for an exemption.

A property is considered vacant if it was not the principal residence of the owner or any permitted occupants, was not occupied by tenants for a total of six months or more during the calendar year, and was not eligible for an exemption.

How Is It Calculated?

For the 2022 and 2023 taxation years, a Vacant Home Tax of one per cent of the Current Value Assessment (CVA) will be levied on all Toronto residences that are declared, deemed, or determined to be vacant for more than six months during the previous year. For 2024 and future taxation years, this tax will increase to three per cent of the CVA.

For instance, if the CVA of your property is $1,000,000 and it’s determined to be vacant, the tax amount billed would be $10,000 (1% x $1,000,000) in 2022 and 2023 and will rise to $30,000 (3% x $1,000,000) from 2024 onwards.

How to Declare Your Property Status

Homeowners can declare their property status through the City’s secure online portal or by mail. In case of an error in the declaration, you can re-file a new declaration as long as it’s not past the deadline.

Occupancy Status Definitions

When declaring your property status, you may encounter different types of occupancy status:

Occupied as the principal residence of the homeowner: This refers to a property where the owner resides and conducts their daily affairs.

Occupied as the principal residence of a permitted occupant: This refers to a person(s) authorized by the registered owner to use a residential property as their principal residence.

Occupied as a tenanted property: This refers to a residential property that is occupied by a tenant for residential purposes or a business tenant that has a written tenancy agreement.

Vacant with an eligible exemption: A residential owner may declare the property vacant but with an eligible exemption.

Vacant or deemed/determined vacant: A residential property that was vacant for six months or more during the taxation year.

Special Cases: Snowbirds and Multi-unit Residential Dwellings

For homeowners who travel for extended periods or “Snowbirds,” the Vacant Home Tax allows owners to be away from their principal residence due to travel, work, and other reasons. The six-month stipulation refers to the property being your principal residence for this period of time, not your physical occupancy of the property.

For properties in the residential property tax class that have a single roll number and multiple units, only one declaration for the entire building is required. If at least one unit was occupied for six months or more, you can indicate that the property was occupied.

In conclusion, the Vacant Home Tax is a significant change that Toronto homeowners should be aware of. It’s crucial to understand the specifics of this tax to ensure you are compliant and avoid unnecessary fees. If you have any questions or need further assistance, consider reaching out to a tax professional or the city’s property tax office.

We hope you have found this summary useful and informative.  We help businesses of all sizes and types with their accounting and tax needs.  We would be pleased to hear from you.

Mahdi Songhori, MAcc

www.amacc.ca