The Toronto Vacant Home Tax

In 2022, the City of Toronto implemented a Vacant Home Tax, intended to increase the supply of housing by discouraging empty homes. The tax requires every homeowner to declare the occupancy of their home every year. 

How Much is the Vacant Home Tax?

On January 1, 2024, Toronto’s Vacant Home Tax was increased from 1% to 3%. 

Homes declared, deemed or determined to be vacant for more than 6 months during the previous year are now taxed at 3% of the Current Value Assessment (CVA). The CVA is the value used by the city to calculate your property taxes and may not be equal to the market value of your home. 

Note: The CVA and occupancy status of the previous year are used to calculate the amount of tax owing in the following year, so if a home with a $1,000,000 CVA in 2023 was vacant for more than 6 months in 2023, the 2023 vacant home tax of 1% would be paid in 2024. If the home is vacant in 2024, then the 3% vacant home tax would be paid in 2025.

The city issues Vacant Home Tax Notices at the end of March, with payments due in three installments in May, June and July. 

Example: 

In 2024, THE CVA of your property is $1,000,000. The home remains vacant for at least 6 months in 2024, and doesn’t qualify for any exemptions.

Vacant Home Tax = 3% x $1,000,000 = $30,000
You will be required to pay vacant home tax of $30,000 in 2025 (payable in 3 installments)

When is a Property Considered Vacant?

Toronto’s vacant tax bylaw considers a property vacant if:

• The property was not the principal residence of the owner or was not occupied by a tenant for a total of six months or more during the calendar year
• The property is not eligible for an exemption
• The owner did not submit a declaration of occupancy status and the property was deemed vacant.

Declaring the Occupancy of Your Toronto Home

You can submit the declaration via the online portal or by mail. Note that you’ll need the 21-digit assessment roll number and customer number from your property tax bill. 

You do not have to complete this declaration if the property:

• Has not yet been assessed for property tax
• Is classified as a multi-residential, commercial or industrial 
• Is classified by MPAC as vacant land, parking space or a condominium locker

Exemptions 

There are all sorts of exemptions to the vacant home tax, detailed on the city’s website, There are exemptions for snowbirds and extended-stay travellers, co-ops, the death of a registered owner, repairs or renovations that made the home uninhabitable, stays in hospital or long-term care homes, homes were sold during the previous calendar year and more. Please contact the city with any inquiries about your specific situation. 

The Federal Underused Housing Tax

The federal government introduced the Underused Housing Tax in 2022 and it currently stands at 1%. The federal tax applies to residential properties owned by:

• A foreign national (ie, not a Canadian citizen or permanent resident)
• Individuals who are citizens or permanent residents who own a residential property as a trustee of a trust, partnership or corporation that is incorporated outside of Canada. 

Exemptions to the Federal Underused Housing Tax

There are MANY exemptions to the underused housing tax, including:

• The home is your (or your spouse’s) primary place of residence; or
• Your child or spouse’s or common-law partner’s child occupies the residential property while pursuing authorized study at a designated learning institution; or
• The home is occupied by a qualifying occupant (ie tenant) for at least 180 days in the calendar year; or
• The home is a vacation property located in an eligible area of Canada and used by you or your spouse or common-law partner for at least 28 days in the calendar year. 

The Canadian government has very detailed information about who must pay the underused housing tax and the relevant exemptions on their website. Please contact your accountant or the government with any questions about your specific situation. 

Do I Have to Pay the Toronto Vacant Tax AND the Federal Underused Housing Tax?

Depending on your individual situation, you may be required to pay both the Toronto Vacant Tax and the Federal Underused Housing Tax.

For example:

You own a home in Toronto that has been vacant for the last 12 months. You are not a Canadian citizen or permanent resident and do not qualify for any of the exemptions under the Toronto or federal programs. You will have to pay both the 3% Toronto tax and the 1% Federal tax.