Toronto city council has approved a plan to implement a new vacant home tax starting next year.
A bylaw supporting the tax will come into effect Jan. 1, becoming the start of the first tax reference year — a period during which a home’s vacancy status will be used to determine whether the tax is payable.
A home will be considered vacant if it has been unoccupied for more than six months during the previous calendar year or it is deemed to be vacant under the bylaw.
There are exemptions for homes under renovation, snowbirds, if the owner is in medical care or passes away.
The tax on vacant homes becomes payable for the first time in early 2023, based on the occupancy status during the prior year.
The tax rate will be 1% of the home’s current value assessment, as determined by Ontario’s Municipal Property Assessment Corp.
Property owners will be required to declare the status of their residential home each year. Failure to do so could have the home deemed vacant and be subject to the tax.
Also, certain properties may be selected for audit. If chosen, the homeowner must provide information and evidence to establish whether the home was vacant or occupied during the reference period.
The city says it’s not clear how many homes in Toronto are currently vacant. However, the tax could generate between $55 and $66 billion in tax revenue each year.
According to the city, its goal is not to collect the tax but to encourage homeowners to sell or rent their unoccupied residence instead of letting it sit empty, thereby creating more opportunities for affordable housing.
City council will review a final report and tax bylaw by the end of 2021. The bylaw must be enacted for the tax to take effect.