To help mitigate the ongoing shortage of homes in the city, Toronto has considered a vacant home tax for several years. Now that City Council has approved the tax, it could go into effect sooner than expected.
Toronto City Council says that the tax on thousands of empty condos and houses across the city could be active as early as January 1st, 2022. The city is currently in the public consultation stage regarding the tax and considering options for identifying units that have not been used for six months or the year prior.
A vacant home tax is not a barrier to entry. In Toronto 21% of the new housing is being built for investors…not residents. About half are off shore investors..we need to pull speculators out of the market class by class and return this supply to Cdns who need housing to live in
— Adam Vaughan MP (@TOAdamVaughan) June 10, 2021
While the tax only amounts to one percent, experts say it should still discourage buyers from purchasing housing solely for investment purposes. The tax will also result in more revenue for the city as it emerges from the COVID-19 pandemic. Some studies indicate that two-thirds of condo investors will likely sell once the new vacant home tax is implemented.
Other benefits include curbing foreign investment in housing, flipping and even ghost hotels. In theory, this should open up more potential property for people that actually need homes and not just speculative investors.
Vancouver also implemented a similar tax on vacant units. The average price of a detached home in Toronto currently sits at $1.75 million, with the overall cost of any home hitting $1.1 million.