A Brief Overview of the New Toronto Vacant Home Tax 

  • 16 janvier 2023
  • Birute Luksenaite

Effective January 1, 2022, the City of Toronto has begun to levy an annual 1% property-value-based tax on vacant residential properties (the Vacant Home Tax or “VHT”). VHT was codified in the new Chapter 778 (https://www.toronto.ca/legdocs/municode/toronto-code-778.pdf) of Part 2 (General By-Laws) of the Municipal Code, which Part already contained, inter alia, the City’s property tax and land transfer tax provisions. 

Toronto is the second city in Canada to enact the so-called underused homes tax, Vancouver being the first city to introduce such a municipal tax effective 2017. Ottawa implemented its counterpart tax concurrently with Toronto. The City of Hamilton and the Regional Municipality of Peel are presently in the process of instituting such taxes. 

The VHT is distinct from the provincial Ontario Non-Resident Speculation Tax and from the federal Underused Housing Tax. BC’s Speculation and Vacancy Tax, although it levies vacancy taxes, is also a separate tax program. 

The goal of the VHT is to increase the supply of housing by discouraging owners from leaving their residential properties unoccupied as the shortage of housing supply continues and to augment public housing funds. The VHT program is harsh. Generally, a residential unit will be taxed as vacant if for MORE than 6 months in the year it is NOT the principal residence of its owner or of another occupant or if the unit is not tenanted for residential purposes for at least 6 months in the year.