February 9, 2023 | Danny McMullen and Luke Giffen
Toronto’s Not-So Empty Promise
What the new Vacant Home Tax means for Torontonians and the local economy
Beginning this year, an annual tax will be collected on vacant Toronto residences. The intent of this tax, called the Vacant Home Tax (the “VHT”) is to “increase the supply of housing by discouraging homeowners from leaving their properties unoccupied”. In order to avoid paying this tax, property owners will in theory be more compelled to either rent or sell their vacant properties. Revenue collected from this tax will also be put towards affordable housing initiatives.
In order for a property to be considered vacant, it must have either been unoccupied for a total of six months during the previous calendar year or deemed vacant under Bylaw 97-2022. The Bylaw recognizes a property as vacant when no self-contained units comprising the residential unit are either the principal residence of the owner or another occupant; or occupied for residential purposes by one or more tenants in aggregate for at least six months of the year.
In order to prove tenancy, homeowners must submit in an annual declaration of the status of their residential properties. Their property’s status must be declared no matter if the owner is living at the property. In addition, failure to declare a property’s status or making false declarations could result in a fine of $250 to $10,000. As well, failure to either provide adequate documentation or complete the declaration by the set deadline will result in the property in question being deemed vacant, which means that the tax will apply. The deadline to submit a declaration of a property for the 2022 calendar year was February 2nd.
Once the property is deemed vacant, the Vacant Home Tax will be imposed at 1% of the Current Value Assessment (CVA) for the following year. For example, if a property was deemed vacant in 2022, and the CVA of the property is $1,000,000, the tax amount billed would be $10,000 (1% x $1,000,000), payable in the year 2023.
There are a few exceptions to the VHT. Notably, if the principal resident is in a long-term care home, it will not be deemed to be vacant. Similarly, repairs or renovations to the unit will exempt the property from the VHT. For a full list of exemptions, see the city of Toronto’s page, here.
The VHT has implications for property transactions as well. Purchasers and vendors are responsible for ensuring that all property declarations have been properly filled and submitted. If not, the VHT will form a lien on the property. As a result, any accrued taxes will be transferred to the purchaser, making it their responsibility following the purchase. For a closing that were to take place before the closing of the declaration period, for example, the vendor must complete the declaration prior to closing. If the closing happens after the closing of the declaration period, the purchaser is then responsible for completing the declaration in the following year.
Homeowners can also be selected for an audit on either a random or specific criteria basis. If selected for an audit, the property owner will be required by the City to provide information and evidence to substantiate their claim of occupancy of the property in question. Otherwise, they will need to rely on an exception. Possible required supporting documentation includes government identification (driver’s license, Ontario Identity Card, etc.), insurance certificates, employment contracts, and more.
To reiterate, the main purpose of the City of Toronto’s VHT is to compel property owners to sell or rent their vacant residential properties, and as a result Torontonians can expect to see more houses on sale or for rent in the city. Mayor John Tory expects this tax to generate “between $55-66 million per year,” which will be going towards affordable housing initiatives. As many Torontonians continue to worry about the rising price of rent in the GTA, here’s to hoping this tax will yield noticeable results in the not-so-distant future.
 Harjaap Sahota, “Toronto’s New Vacant Home Tax,” Jan 6, 2023, https://www.kmblaw.com/torontos-new-vaccant-home-tax/, accessed Feb 6, 2023.
 City of Toronto By-Law 97-2022, accessed Feb 6, 2023
 Supra note 1.
 City of Toronto, “Vacant Home Tax”, https://www.toronto.ca/services-payments/property-taxes-utilities/vacant-home-tax/, accessed Feb 6, 2023.
 Supra note 1.
 Supra note 4.