A Vacant Home Tax (VHT) is introduced by the City of Toronto on vacant residences, starting from 2023 based on the occupancy status in 2022 calendar year.
All Toronto residential property owners are required to submit an annual declaration of their property’s occupancy status. Failing to respond by deadline or making a false declaration may result in a) $250 – 10,000 fines; and b) the City deeming the property vacant, a Vacant Home Tax Notice being issued, and tax being added to the property tax bill.
Let’s look into some details:
Deadline for declaration: February 2, 2023 for 2022 occupancy status.
Annual tax on vacant residences = 1% of the property’s current value assessment (CVA). That means, a vacant $1 million-dollar home would be subject to a vacancy tax of $10,000.
Due date for tax payment: May 1, 2023 for 2022 declaration.
Boundaries of the properties: within City of Toronto.
Other GTA areas: York Region government is also proposing a similar VHT plan, but has not implemented.
So, what property is considered a vacant one?
Any residential property that is not used as principal residence by the owner or any permitted occupant, or left unoccupied for six months or more during the previous calendar year will be subject to the vacancy tax.
There are some exceptions as listed below:
Owner of the property has died, or is in hospital or long-term care;
The property is undergoing major repairs or renovations with all necessary permits;
There is a court order or transfer of 100% of legal ownership underway; or
The property is required for occupation for employment purpose by its owner who has a principal residence outside of GTA.
How to declare?
24/7 Online portal: https://www.toronto.ca/services-payments/property-taxes-utilities/vacant-home-tax/vacant-home-tax-declaration-of-occupancy-status/
Download the fillable form https://www.toronto.ca/wp-content/uploads/2022/12/949b-COTVHTDeclarationForm.pdf, fill out or print and fill out, and mail to “City of Toronto, Revenue Services, Vacant Home Tax, 5100 Yonge St, Toronto, ON M2N 5V7”.
Call the City to receive a paper declaration form in mail, fill out and mail to the same address indicated in #2.
Information needed for declaration:
21-digit roll number and customer number from your tax bill or statement; and
Name and telephone number of tenants or permitted occupants, if the property is not occupied by the homeowner.
Note that incomplete forms will not be accepted.
What happens if an error has been made in the declaration?
Submit a new declaration prior to February 2nd, the deadline; or
File a Notice of Complaint if it is after the deadline.
How to Pay the VHT?
Pay electronically through “MyToronto Pay” portal: https://pay.toronto.ca/
Pay through your bank’s online banking portal;
Pay at your bank’s teller counter; or
Mail-in a cheque to “Treasurer, City of Toronto, Box 5000, Toronto, ON M2N 5V1”.
Overdue VHT will be subject to a fee at 1.25% on the first day of default and interest at 1.25% for each month thereafter.
A declaration of occupancy status may be selected for audit on a random or specific criteria basis. If selected for audit, the City will require the owner to provide information and evidence to substantiate their claim of occupancy of a residential property or any exemption.
The goal of the City of Toronto’s VHT is to increase the supply of housing by discouraging owners from leaving their residential properties unoccupied. Homeowners who choose to keep their properties vacant will be subject to this tax. Revenues collected from the Vacant Home Tax will be allocated towards affordable housing initiatives.
Due to the high amount of the VHT, we recommend that the residential property owners should rent out or let family members to use the properties other than the principal residence. Care should be taken to declare the same principal residence for both income tax and VHT purposes.
The VHT declaration should be straight-forward and easy. We strongly recommend that residential owners do it by themselves. However, for our existing clients who need help, we may provide consultation and declaration service at a fee.