Toronto's Vacant Home Tax

Have you declared your home's status for 2024?

Although this year, the city is waiving the usual late fee of $21.24 for missing the declaration deadline (It may reinstate the late fee in the future), it is advisable to declare your home and rental property's status(es) through the city's online portal by the April 30th, 2025 deadline.

What is the Vacant Home Tax?

It’s an annual tax on homes (houses and condos) that are not used as principal residences by owners or their tenants for six months or more in a year — with some exceptions.

Purpose: to impose the tax as a way to?push homeowners, particularly investors living elsewhere, to either sell or rent their properties if they’re unoccupied during?the city's current housing crisis.

The tax took effect in 2022 and every year owners must self-report their home’s occupancy status to the city — even if they live there. Otherwise, the home will be?automatically declared vacant and a bill that’s three per cent of the home’s assessed value will be sent to the owner.

Impact: Revenue from the VHT is reinvested into affordable housing initiatives in Toronto. For the 2022 tax year, when the rate was one per cent, the vacant home tax collected approximately $56.5 million. For 2023, it generated about $50.6 million. According to the city’s chief financial officer, the money is being reinvested in various housing initiatives that can increase or preserve Toronto’s housing supply.?

Who Needs to Declare?

All residential property owners in Toronto are required to declare the occupancy status of their properties annually, even if the property is not vacant.

Exemptions: Certain exemptions apply, including: Property Sale, Renovations, Medical Reasons, Death of the Owner, Court Order.

Strategies for Property Investors to Navigate the Vacant Home Tax (VHT)

1. Optimize Usage:

• Rent Out the Property: Ensure the property is leased for at least six months of the calendar year. This can be done through long-term leases or short-term rental platforms (where legal).
• Occupy the Property: If feasible, designate the property as a principal residence for you or a family member.

2. Explore Exemptions:

If the property qualifies for an exemption (e.g., undergoing renovations, recently purchased, or under a court order), ensure you have proper documentation (e.g., building permits, sale agreements, or legal paperwork) to support your case during the declaration process.

3. Collaborate with Professionals:

• Work with Property Managers: They can help find tenants quickly and ensure compliance with local rental laws.
• Engage a Tax Consultant: They can guide you on how to report and manage potential tax liabilities while maximizing exemptions.

4. Track Key Dates:

• Annual Declaration Deadline: Set reminders for February 28 each year to avoid penalties.
• Tax Payment Deadline: Be aware of the due date for any assessed taxes to avoid interest charges.

5. Monitor Market Trends:

• High condo completions in 2024 led to a softening rental market. Use this to your advantage by pricing rentals competitively to ensure occupancy.

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Source: City of Toronto and Toronto Star