Toronto’s New Vacant Home Tax – Deadline Fast Approaching – Property Taxes

The New Toronto Vacant Home Tax is an annual tax that will be levied on vacant residential homes in Toronto beginning in 2023. The Bylaw supporting the new vacant home tax came into effect on January 1, 2022, and the tax will be payable in 2023.

Background

The Vacant Home Tax aims to help address the current housing supply issue facing Toronto by discouraging homeowners from leaving their residential properties unoccupied. Vancouver imposed a similar tax in 2017, and the number of vacant homes is estimated to have dropped by 25 percent.

Revenue collected from the Vacant Homes Tax will be allocated to affordable housing initiatives.

How Does the Tax Work?

All residential property owners in Toronto will be required to file an annual declaration regarding the occupancy status of their home. From January 1, 2022, all main residences that are unoccupied for more than six months during the year will be subject to paying tax the following year.

If the declaration is selected for inspection, the City of Toronto will require the owner to provide information and evidence to substantiate their claim for residential property occupancy or any exemption.

How is the Tax Calculated?

The tax is calculated at 1 percent of the current value of the property.

How to Report Your Vacancy Status

The deadline for making a declaration is 2 February of the following year. Declarations can be made through the City of Toronto’s online declaration portal or by mail.

If a homeowner fails to make the annual declaration by the deadline and/or provide supporting documentation, their property will be considered vacant and subject to the tax. In addition, homeowners who fail to make a declaration or make a false declaration may be subject to a fine of between $250 and $10,000. If any changes need to be made to a previously submitted declaration, the following solutions will be available:

1. A new declaration may be submitted if the declaration deadline of 2 February has not yet passed; or




2. A Notice of Complaint can be filed through the online portal if the deadline is around February 2.

How to Dispute a Vacant Home Tax Notice

A Notice of Complaint can be filed to dispute a Vacancy Tax Notice or Supplementary Assessment. The Notice of Complaint must be received within the following time periods:

1. If a Tax Notice of Vacancy is disputed, the Notice of Complaint must be received on or before the 10^th business day of April in the year following the date on which such payment was due.




2. If there is an objection to a Supplementary Notice, the Notice of Objection must be received within 90 days of the date on the Supplementary Notice.

It is also possible to appeal against the decision made on a Notice of Complaint by submitting a request for appeal within 90 days of receiving the decision.

How to Pay the Tax

The Vacant Homes Tax is based on the occupancy status of the property for the previous year. A Vacant House Tax Notice will be issued in March/April of the following year to homeowners who are declared vacant for six months or more during the year. Payment will be due on 1 May of the following year.

Payment can be made in any of the following ways:

1. MyToronto Pay – a service provided by the City of Toronto to manage and pay parking tickets, property taxes and utility bills.




2. Three Financial Institutions




3. Post-dated checks payable to:

Any overdue amount of Vacant Home Tax carries interest at a rate of 1.25 per cent per month.

Exemptions from Tax

A vacant property may be exempt from Vacant Homes Tax if any of the following circumstances occur and the corresponding supporting documents are provided:

1. Death of a registered owner – the property will be exempt from Vacant House Tax if the property was empty for six months or more in the previous year due to the death of an owner. A copy of the death certificate must be provided.




2. Repairs or renovations – the property will be exempt from the Vacant Home Tax if the repairs and renovations have prevented the occupancy and normal use of the property, all necessary permits have been issued, and the City’s Chief Building Official is of the opinion that the repairs and the reforms are being actively reformed without unnecessary delay. The repairs or renovations that prevent occupancy must be described and a copy of the building permit issues related to the repairs and renovations must be provided.




3. The main resident is in care – the property will be exempt from Vacant Homes Tax if the main resident is in a hospital, long-term care or support facility for up to six months during the tax year. This exemption may be claimed for up to two consecutive taxation years. A signed letter from the health care facility on letterhead must be provided




4. Transfer of legal ownership – the property will be exempt from the Vacant Home Tax if it was purchased in the previous year and the sale involved a transfer of 100 percent interest in the property to an unrelated individual or corporation. A copy of the land transfer deed must be provided.




5. Occupancy for full-time employment – ​​the property will be exempt from the Vacant Home Tax if its owner, who has a primary residence outside the Greater Toronto Area, needs it for employment purposes for at least six months in the taxation year. Area. Proof of residency outside the Greater Toronto Area and a signed letter from the employer on company letterhead or employment contract must be provided.




6. Court order – the property will be exempt from the Vacant Homes Tax if there is a court order in place that prohibits the occupation of the vacant property for at least six months of the tax year. A copy of the court order must be provided.

Important Information to Be Aware of in Property Transactions

The Vacant Homes Tax has implications for both buyers and sellers in property transactions:

1. It is the responsibility of both parties to ensure that the declaration is filed.




2. The Vacant Home Tax will be a lien on the property, and any unpaid taxes will be the responsibility of the buyer.




3. If closing occurs between January 1st and February 2nd, the seller must complete the declaration prior to closing, as the seller is the party that knows the occupancy status of the property for the previous year.




4. If a closing occurs between February 3 and December 31, the buyer must submit a declaration the following year. The buyer will qualify for the “legal transfer of ownership” exemption described above.




5. Sellers should provide the buyer with a copy of the completed and filed property status declaration.




6. Sellers should provide a statutory declaration at closing confirming that the property status declaration filed is true and correct.

Conclusion

The Vacant Home Tax is one of many efforts to curb Toronto’s housing market crisis. Currently, 2-4 percent of Toronto’s residential units are estimated to be vacant. In a few months, the first set of annual declarations will be filed, and the City of Toronto will be able to begin measuring the effect of the Vacant House Tax on the Toronto housing market. Owners of vacant homes must decide whether to occupy or rent their property or pay the tax that contributes to affordable housing initiatives.

The content of this article is intended to provide a general guide to the subject. Specialist advice should be sought about your specific circumstances.