The Housing Vacancy Act: Review and Analysis

If you have a property collecting cobwebs and dust, you may find yourself a victim of the new Vacant Home Tax. In many cities across Ontario, a tax on unused properties is to be implemented starting in 2023 or 2024. Cities like Toronto, Hamilton, and Ottawa have already announced their plans to run up your bill earlier this year. According to the city of Toronto, the goal of the Vacant Home Tax is to free up housing units, encourage homeowners to rent, and deter homeowners from hogging up residential units during a housing crisis.?

The city of Hamilton stated that any house left vacant for a minimum of six months will be subject to this tax. They also state that you will be given the opportunity to claim the status of your house, either vacant or occupied. Those who fail to declare their property’s status will also be subject to the tax.

Hamilton offers some exemptions to the tax if you declare your home as vacant. The full list can be found on their website, but some of these exemptions include the death of an owner, renovations, or a homeowner’s relocation to a long-term care facility, all of which describe extenuating circumstances.

Hamilton states that further details will be announced next month, in January 2023.?

The city of Toronto has announced on their website that the tax which will be levied on vacant properties starting in January 2022. Similar to Hamilton, Toronto requires a minimum of six months of vacancy, or a classification as vacant by the bylaw. Toronto states that revenue from this tax goes towards affordable housing.

Like Hamilton, Toronto will offer the opportunity to declare your property’s status. All property owners in the city, regardless of whether or not you have any vacant properties, will need to declare their property occupancy status.

Toronto City's website provides a calculation section for the tax. They state “a Vacant Home Tax of one percent of the Current Value Assessment (CVA) will be imposed” on homes declared as vacant or presumed vacant due to no response. The tax applies to the vacancy status of your home from the previous year and will be paid the next.?

Toronto outlines the process of declaring your house as vacant. Owners will be provided a “21-digit assessment roll number and customer number from your tax bill or property tax account statement.” Toronto has created a “secure online declaration portal” for residents to claim vacancy or occupancy. If you don’t like technology, you can call 311 to be provided a paper form to be received by the city before the given deadline. If your paper form is late, you risk a fine and an automatic vacancy declaration. If you are renting that property to tenants, you are still responsible for this property and must complete some extra steps outlined on Toronto’s website.?

Declarations will open in March or April and are to be paid by May 1. Also, you can’t lie to avoid paying; if you fail to declare or make a false declaration you can be fined up to $10,000. There are several declarations on a property that can be made. Again, this is outlined in Toronto’s website, but a few include declaration as principal residence of homeowner, occupied as principal resident of tenant, vacant with eligible exemption, vacant, and more. Finally, Toronto says you can file a Notice of Complaint and further appeals if you think you were done wrong.?

In short, the purpose of the Vacancy Tax shows the city’s good intentions in rectifying the housing crisis. In order to make sure the average Ontarian can get a chance at their first home before a millionaire can hog up space with their second or third home, one can only hope the tax as a deterrent is effective enough. If nothing else, it should increase the rental stock.

However, as we have long said, the real solution to the affordable housing crisis is building an environment where great jobs are created. We need to lower taxes and reduce government spending. We need to adjust immigration levels to where the new population can be responsibly absorbed into the economy. That is fair for everyone.

We also need to make it fair and reasonable for landlords. The horror stories that have been reported about bad tenants driving landlords to near bankruptcy by withholding rent is enough to close the private rental market. No one should have a million-dollar asset tired up by someone exploiting the inefficiencies of the system. If we are to encourage landlords to rent their homes, the arbitration mechanisms need to be radically improved. If not, many will decide that 1% is a small price to pay to safeguard their property and financial future.

In the meantime, when you receive your reminder from the City to submit your declaration of property’s 2022 occupancy status, please consider doing that by the official deadline, February 2, 2023. The submission is a very simple and straight forward process, which can be easily completed vie the City of Toronto portal.