What You Need To Know About Toronto's Vacant Home Tax

By: Steven Kim

What You Need To Know About Toronto's Vacant Home Tax

Tags: Homes In Toronto, Vacant Home Tax, Homeowners, Investors

As of January 1, 2023, if you own a residential property in Toronto that’s sitting empty more than 6 months of the year (even if it’s your primary residence), you’ll be taxed at 1% of the property’s assessed value in the following year. So if your $1.5M property was vacant in 2022, you’ll be looking at handing over $15K to the city – and that’s in addition to your regular property taxes. 


Even if you live in your place full-time or you have extenuating circumstances, you still need to let the city know so you don’t get taxed. 


Vacant Home Tax FAQ


How does the city define “vacant?”

A property that’s been unoccupied (by owners or renters) for more than 6 months in the last calendar year, starting January 1, 2022. 


I live in my home 12 months of the year, so this doesn’t affect me, right? 

Actually, it does. If you live in your home all year, you have to proactively declare that to the city every year. All residential property owners in Toronto will need to fill out a declaration about their property’s occupancy status by Feb 2. That includes the home you live in, as well as any properties you rent out. 


You should have already received a notice in the mail, and you can make your declaration through the City of Toronto’s portal anytime. 


What happens if I don’t submit a declaration? 

Property owners who don’t submit by February 2, 2023 face a $250 fine. 


Are there any exemptions to the tax? 

Yes. If the owner has died or is in hospital or long-term care, if the property is being renovated, is under a court order that prohibits someone from living there, or the ownership is in the process of being transferred. 


What if it’s a rental property? 

The same rules apply to rentals as to owner-occupied properties. You must have tenants living there 6 or more months of the year to avoid the tax. 


What if I’m not truthful in my declaration? 

The city hasn’t shared how it will inspect homes or enforce the tax. However, they have said that they may audit declarations, in which case you will have to prove the property is actually occupied. 


Do non-residents or non-Canadian property owners have to pay the tax? 

Yes. It applies to ALL property owners, resident or not. In fact, the federal government has announced a Canada-wide tax on vacation properties owned by non-residents and non-Canadians


What’s the point of this tax? 

The city has a severe shortage of rental properties. Because we’re in a housing crisis, the government has instituted the tax to increase housing availability and affordability by freeing up more homes. In other words, they’re looking to generate more rental properties quickly by discouraging owners from leaving properties unused. It will also raise up to $65M for the city, which they plan to use to build more affordable housing. 


Will this tax actually free up housing? 

Time will tell. However, the Toronto tax is modelled on Vancouver’s Empty Home Tax, which started out at 1% in 2017 and has grown to 5% in 2023. That tax has proven to be effective, returning around 20,000 empty units (mostly condos) to the rental market and raising hundreds of millions in revenue towards new affordable housing projects. 


Got questions? Get in touch! We’re happy to help you understand how these changes could impact you and your real estate goals.