As of January 1st, 2021, anyone who owns a vacant home in Toronto could be hit with a new tax that aims to curb the city’s out-of-control housing market.
First off, while the new bylaw comes into effect at the start of the new year, the tax on empty homes won’t be payable until early 2023 and is based on the occupancy status related to the year prior.
The city of Toronto says that the tax rate is 1 percent of the property’s current assessed value for the year while it remains vacant. This means that a $1 million home located in the city would be subject to a $10,000 annual tax if it remains unoccupied for more than six months during the previous year.
A vacant home tax has been approved in Toronto. Homeowners who choose to keep their properties vacant, rather than opening them up to the rental or real estate market are subject to a tax. We want to hear from you on the elements of this tax. Visit https://t.co/uwFjbbE9v6 pic.twitter.com/qSeaINmCuU
— City of Toronto (@cityoftoronto) October 17, 2021
However, this only applies if the home is not the owner’s principal home. There are also some exceptions to the bylaw, including the home owner’s death, if they’re under medical care or if the house is undergoing a renovation. With this in mind, the tax wouldn’t apply to Canadian snowbirds that fly south for the summer given their home in Canada is their main residence.
The city of Toronto says that the new tax aims to reduce the number of residential properties that sit empty in the city. The concept is that these houses could be part of the market and would alleviate the ongoing affordability crisis. The tax gathered from vacant houses will also be used to fund affordable housing initiatives.
While it’s unclear how successful this tax will be, based on Vancouver, it could bring in between $55 to $66 million per year, according to Storeys.