Unlocking the Key to Vibrant Neighborhoods: The Vacant Home Tax

By gtacpa | Jan 26, 2024

What is it? And when is it due?

By February 29^th, 2024, all residential property owners in Toronto are required to declare the occupancy status of their properties. This new law is called the Vacant Home Tax, a new tax law introduced in 2021 to put pressure on the owners of vacant homes to either sell or list their properties on the rental market. If you are a residential property owner in the city of Toronto who is subject to the Vacant Home Tax, you are to pay this tax in three installments by the following dates: May 15^th, June 17^th, and July 15^th of 2024. Failure to abide by this new law may result in fines of up to $10,000.00.

How does it work?

All owners of properties in Toronto that fall under the residential property tax class are required to declare the occupancy status of their property every year, even if they reside there.

However, there are certain circumstances where the tax may not apply to you, such as:

Homes where the owner lives as their main residence.
Properties occupied by permitted tenants or business occupants.
Properties that qualify for an exemption (please refer to the link below)

https://www.toronto.ca/services-payments/property-taxes-utilities/vacant-home-tax/

If you’re a property owner who satisfies one of the three conditions below, you do not have to declare your occupancy:

The property has not been assessed.
The property is classed as multi-residential, commercial, or industrial.
The property is classified by MPAC as vacant land, parking space, or a condominium locker.

Declarations of occupancy status are to be submitted through the online portal on the City of Toronto’s website, or through mail. The form must be submitted by either the owner of the property or an authorized representative acting on their behalf.

How is the Vacant Home Tax (VHT) rate applied?

For the years 2022 and 2023, a VHT rate of 1% of the Current Value Assessment will be applied to all Toronto residences that are declared to be vacant for more than 6 months during the previous year.

An example explaining how the VHT is applied from Toronto.ca: “If the [Current Value Assessment] of your property is $1,000,000, the tax amount billed would be $10,000 (1% x $1,000,000).”

From 2024 and onwards, a VHT rate of 3% of the Current Value Assessment will be applied to all Toronto residences that fall under the same conditions as in previous years.

An example explaining how the VHT is applied from Toronto.ca: “If the [Current Value Assessment] of your property is $1,000,000, the tax amount billed would be $30,000 (3% x $1,000,000).”

What are the consequences of a late or false declaration?

A new rule, effective January 1, 2024, is a fee of $21.24 that will be charged for failing to submit a declaration of occupancy status by the deadline provided above.

If you are subject to the Vacant Home Tax, the dates for the three payments are May 15^th, June 17^th, and July 15^th of 2024.

If you fail to submit a declaration of occupancy status by the deadline, you may be charged with a fine of $250.00. Now, if you submit a false declaration of occupancy status or fail to provide information when requested, you may be charged with a fine of up to $10,000.00, in addition to the payment of the tax.

For all inquiries/questions regarding the Vacant Home Tax, please call Senathi & Associates at (416) 479-0600 or email us at info@gtacpa.ca, and we’d be more than happy to be of assistance!