With the new year comes a new tax. We received several inquiries about this tax and what it means for our clients, so we wanted to share key details with you as the deadline quickly approaches:
Who does this tax apply to?
The vacancy tax affects all homeowners in the city of Toronto, and could affect buyers too.
All residential homeowners would have received a notice in the mail. Mine was on a yellow paper. The notice states “all residential property owners are required to declare the occupancy status of their residential property(s) annually.”
The notice states that you must reply and declare the status of your home before February 2, 2023 and if you don’t, “late declarations may be subject to a fine of $250.” The vacancy tax is equal to 1 percent of a property’s current value assessment meaning someone with a vacant $1 million-dollar home would have to pay a vacancy tax of $10,000. If you fail to declare, the tax could be assessed against you.
What do I need to know if I am buying a house?
This could affect buyers if they purchase a home where the seller has failed to declare the occupancy, the tax is assessed against the home and could be passed along to the new owners. As a buyer, ensure your agent is taking the necessary steps to protect you in your offer(s). Title insurance companies have declared they will not be paying this tax.
Could I be exempt from this tax?
Any residential properties that sit empty for more than six months in any given year will be subject to the vacancy tax. There are a few exemptions from the tax;
- If you are renovating with a permit and your home is vacant for the purpose of renovations
- If the homeowner has recently passed away
- If the homeowner is in a care home, hospital, or nursing home
Is this tax a one-time thing?
This tax is here to stay and, according to the City of Toronto’s website, “All residential property owners in Toronto will be required to declare the status of their property(s) annually, even if they live there.
Declarations must be made by the homeowner or someone acting on behalf of the owner. The declaration will determine whether the Vacant Home Tax applies and is payable.”
“Principal residences may be left unoccupied for periods of up to a total of six months throughout the taxation year without being subject to the tax.”
How do I complete the declaration?
Many of us already received status declaration forms by mail — they outline the steps for declaring, the declaration deadline, and explain the Vacant Home Tax itself — but for those who have not, instructions and a declaration portal can be found on the City’s website. You will need some information, including your assessment roll number and your customer number. If required, homeowners can also submit a paper declaration form, which must be received by the City by the February 2 deadline.