Hike to Vacant Home Tax Bad News for Investors

Toronto city council has voted in favour of increasing the vacant home tax from 1% to 3%.

Additional revenue generated from the change will go the Multi-Unit Residential Acquisition program, which supports the purchase of market rental buildings in danger of being converted to condos. Once bought, the buildings will become permanent affordable homes for non-profit and Indigenous housing organizations.

The tax took effect in 2022 and became payable this year. It requires property owners to annually declare the status of their residential home. A home is considered vacant if it has been unoccupied for six months or longer during the previous calendar year or it is deemed vacant under the bylaw.

There are exemptions for homes under renovation, snowbirds, or if the owner is in medical care or has died.

In 2022, nearly 2,340 property owners declared their residential units vacant. An additional 44,902 properties were deemed vacant by the city because no declaration was made.

The city collected $54 million through the tax in its first year of implementation.

Boosting the tax to 3% of a home’s current assessed value, determined by Ontario’s Municipal Property Assessment Corp., is expected to generate an additional $50 million in revenue for the city each year, so long as the number of vacant homes stays around the same.