Executive Committee approves framework for a tax on vacant homes in Toronto

City Council’s Executive Committee has approved City of Toronto staff’s tax design and implementation plan to introduce a new tax on vacant Toronto homes starting in 2022. The goal of the tax is to change the behaviours of vacant home homeowners, encouraging them to sell or rent out the homes, thereby increasing the housing supply.

If approved by City Council, a bylaw supporting the tax would come into effect on Saturday, January 1, 2022, and that date would also become the start of the first tax reference year. The tax reference year is the year that determines whether the tax is payable. The tax would become payable for the first time in early 2023, based on the occupancy status during the prior reference year.   

A home is considered vacant if it has been unoccupied for more than six months during the previous calendar year. Some exemptions to this include death of the owner, the homeowner is under medical care, or the home is undergoing renovation. 

The initial tax rate being recommended by City staff is one per cent of the property's current value assessment (CVA) for the year in which the home is vacant. While the number of vacant homes in Toronto is currently unknown, using Vancouver’s tax metrics – assuming one per cent of Toronto’s housing stock is vacant, at a tax rate of one per cent on the average Toronto home’s current assessed value, it could equal $55 million to $66 million in tax revenue per year.

As part of the tax design, property owners will be required to declare the status of their residential home each year. This will determine the home’s occupancy status and whether the tax is payable. Property owners who don’t complete their declaration could have their unit deemed vacant and be subject to the tax.

Certain properties 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 establish whether the home was vacant or occupied during the reference period. To ensure compliance and that tax payments are being made as required, the tax will include provisions including penalties for failure to pay, fines for various offences, and a dispute resolution process.

City Council will consider the staff report at their meeting of Wednesday, July 14 to Thursday, July 15.  If approved, a final report and bylaw will be prepared for Council's review by the end of 2021.

Quotes

“A vacant home tax will result in a much needed increase to Toronto’s housing supply, so I’m happy to see it approved today. The vast majority of Toronto property owners will not pay this tax, but its benefits will be felt by residents in need of a place to live. We simply can’t afford to have housing for thousands of homes sitting empty. You may live in it, you may rent it, but if it sits empty you will pay a tax that helps us build more affordable housing people can live in." 
- Mayor John Tory 

“I am pleased that Executive Committee is moving forward with this measure. From a housing perspective, a vacant home tax will open up more housing options for Toronto residents. Remember, the goal of this tax is to not be a revenue tool for the City, but to open up the City’s housing supply by making vacant homes available. If homeowners don’t want to rent or sell their homes, they can pay a tax. These funds can then be invested in affordable housing. Creating housing options for Toronto residents is the priority.”

- Deputy Mayor Ana Bailᾶo (Davenport), Chair of the Planning and Housing Committee

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