Real Estate

Vacancy Tax in Toronto: Your Empty Home Tax Guide

Vacancy Tax in Toronto: Your Empty Home Tax Guide
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  • Tvine
| Jan 30, 2023
Reviewed, Mar 28, 2024
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    The City of Toronto is implementing in 2023 a new empty home tax on all residential homes. This new vacancy tax comes in addition to any other existing property taxes already in place in Toronto. In this article, we’ll explain what you need to know about this new vacancy tax, how it works and how to pay for it.


    Key Highlights

    • Starting in 2023, all homeowners in Toronto need to declare the occupancy of their properties and if the property is empty for more than 6 months of the year, they may face a tax of 1% of the value of the property.
    • This new tax aims at discouraging owners to leave their property unoccupied for an extended period of time which will hopefully ease the housing supply in the city.
    • There are various exemptions so make sure to check the status of your property to see if it meets any of the criteria. 

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    What Is a Vacancy Tax

    A vacancy tax is a tax that is applied to empty homes in order to incentivize owners to rent out their property instead of leaving it vacant, thereby increasing the housing supply and hopefully reducing housing prices.

    How the Empty Home Tax Works

    All property owners in Toronto must declare whether their property was empty or not during the previous calendar year. For instance, in 2023 owners are reporting the occupancy of their property in 2022. Once they complete the declaration, they’ll find out whether or not they are required to pay the empty home tax.

    Who is Subject to the Empty Home Tax?

    The Toronto vacant home tax applies to all residential property owners who left their properties empty for more than six months in the previous calendar year. The tax doesn’t apply to your property if it’s your principal residence, if it’s the principal residence of a permitted occupant or your tenant and lastly if you qualify for an exemption from the vacant home tax. 

    Empty Home Tax Calculation

    The empty home tax is a tax applied to properties in Toronto that are left unoccupied for more than six months of the year. It’s calculated using the taxable assessed value of your property and the applicable tax rate for the year, which is 1% in Toronto. For example, if the taxable assessed value of the property is $800,000, the empty home tax would be calculated as $800,000 X 1% = $8,000.

    How to Declare Vacancy Tax

    In 2023, all Toronto residential property owners must declare their properties 2022 occupancy status by February 2, 2023. The declaration is done on the city’s declaration portal. If you cannot do it online, you can also fill in the paper declaration that can be found on their website. There are various exemptions to the vacancy tax so make sure to check the criteria on the city’s portal.

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    How to Pay Vacancy Tax

    Toronto homeowners with a secondary residence have several ways to pay their vacancy tax once they’ve done their declaration for the previous year. 

    Paying with MyToronto Pay

    You can utilize the official MyTorontoPay portal to pay your vacant home tax. All you need to do is log in to your account, select the payment option, then either pay by Electronic Funds Transfer, debit or credit card. Once the payment is processed, you’ll receive an email confirmation and a receipt of payment.

    Paying with Financial Institutions

    Another option is to pay your tax using your financial institution’s online banking, telephone banking, ATM or in person. To do so, you’ll need your 21-digit assessment roll number from your Vacant Home Tax Notice.

    Paying by Mail

    The final option to pay your tax is by sending a post-dated cheque payable to the Treasurer, City of Toronto:

    Treasurer, City of Toronto
    Box 5000
    Toronto, ON M2N 5V1

    Late Payment, Interest & Fees

    Depending on the payment option chosen, there may be a fee to pay the vacancy tax Toronto.
    In case of late payment, interest fees will be added to any vacant home tax that is overdue and the unpaid amount will be added to your property tax for the property.

    FAQ

    Here are the answers to common questions about the empty home tax in Toronto.

    How will the city know that a property is vacant?

    It isn’t clear yet how the city will know if a property is vacant or not. However, according to the City of Toronto website, properties will be subject to randomized audits as well as audits based on specific criteria.


    Are there any other exemptions to the vacant home tax?

    An empty property can be exempt from the Vacant Home Tax in the following conditions: the property is vacant due to the death of the owner, you’re planning repairs or renovations on the property, the primary resident is in care, if there’s been a recent transfer in ownership and if there’s a court order.

    What if I fail to fill out a declaration for my property?

    The vacancy tax bylaw stipulates that if you fail to fill out the declaration in time, you’ll get a $250 fine for late declaration and your property will be considered to be vacant. When a property is deemed to be vacant, the owner will be asked to pay the vacancy tax and will receive a Vacancy Tax Notice. To avoid this, please make sure to declare your property occupancy in time each year.

    Final thoughts

    The new vacancy tax in Toronto is set to come into effect in 2023 and will apply to all residential properties. This new tax is in addition to any existing property taxes that are already in place. If you own a vacant home in Toronto, it’s important to be aware of how this new tax works and how you can pay for it. With this information, you can make sure you’re prepared when the time comes.


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