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An Overview of Vacant Home Tax

The Vacant Home Tax (VHT) seeks to incentivize owners to maintain, occupy, or rent out their homes, increasing the supply of available housing. It is also considered as a tool to solve the challenge of affordable housing, and the money raised from this tax will be used to fund projects related to affordable housing.

Where and when does it apply in Ontario?

The City of Toronto and the City of Ottawa are two cities in Ontario that have enacted a VHT. The City of Hamilton is also in the process of introducing a VHT starting in 2024, and Peel Region along with many other municipalities have undertook public discussions to decide on the logistics and next steps for implementation.

The VHT went into effect in the tax year of 2023 and will apply to non-principal residences that were vacant for a total of 184 days or six months in 2022. The tax is determined by whether or not the property was occupied in the previous year. Therefore, to put it in simple terms, the VHT will be due in the following tax year if the house was deemed to be vacant over the course of the previous year.

What is considered a vacant home?

If a home was not utilized as the primary residence by the owner(s), any authorized occupant(s), or tenants for a total of six months or more in the previous calendar year, it is deemed vacant. If a property owner neglects to submit a declaration of occupancy status by the bylaw, properties may also be regarded or deemed to be vacant.

Calculations:

Only homes that are deemed to have been vacant for more than six months during the preceding year will be subject to a Vacant Home Tax of 1% of the Current Value Assessment (CVA). For instance, if the CVA of your property is $1,000,000.00, the vacancy tax amount would be $10,000 (1% of $1,000,000.00). The percentage rate in Toronto is consistent with the vacancy tax plans being implemented in Hamilton and Ottawa, but as other municipalities have yet to implement a vacancy tax, the rate at which vacancy tax will be charged in those regions is yet to be determined.

What obligations do I have as a current homeowner?

An occupancy declaration needs to be filed before the deadline using the City’s online portal where the property is situated. Using the roll number and customer number/access code provided in the November and January VHT notice, property owners can complete their declarations online. The roll number and customer number/access code can also be found by owners at the top of their property tax bill. To file your property’s 2022 occupancy status, the deadline in Toronto was February 28, 2023, and for Ottawa, it was, March 16, 2023. This declaration will ultimately be used to determine whether the vacant home tax is applicable to your property.

Even though all homeowners in these regions must file a declaration of occupancy status, the following are exempt from the tax:

  • properties that serve as an owner’s primary residence
  • properties that are a permitted occupant’s or tenant’s primary residence
  • certain exempt residential properties.

Furthermore, if one of the following conditions is satisfied, a property may be left unoccupied and be exempt:

  • death of a registered owner;
  • repairs or renovations;
  • the primary resident being looked after;
  • change in ownership status;
  • habitation for a full-time job; or
  • court order.

Paying the VHT:

A Vacant Home Tax Notice will be sent to owners of properties subject to the tax in March or April, and payment is due in three installments from May to July. In Toronto, the VHT is payable electronically through MyToronto Pay or through the online banking platform of the owner’s financial institution. In Ottawa, the VHT amount will be included in the Final Tax Bill, which is due in June and must be paid by the due date.

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NOTE: This article has been written for general information purposes only and does NOT constitute legal advice. For further questions and/or legal advice please consult a qualified lawyer.