This is the second post in a three-part series that provides important information regarding vacant home tax for homeowners in Toronto.
This post provides information for homeowners regarding the Toronto Vacant Home Tax (the “VHT”)[1].
How it works?
In an effort to increase the supply of housing, the City of Toronto has implemented an annual tax to be levied on vacant Toronto residences. The VHT now requires residential property owners to submit a declaration of their property’s status for the previous year. Homeowners who choose to keep their properties vacant will be subject to this tax.
VHT Calculation
For the 2022 and 2023 taxation years, a Vacant Home Tax of one per cent of the Current Value Assessment (CVA) will be levied on all Toronto residences that are declared, deemed or determined to be vacant for more than six months during the previous year.
For 2024 and future taxation years, a tax of three per cent of the CVA will be levied on all Toronto residences that are declared, deemed or determined to be vacant for more than six months during the previous year.
The tax is based on the property’s occupancy status and CVA for the previous year. For example, if the home is vacant in 2023 the tax will be calculated using the 2023 CVA and will become payable in 2024.
Owners of properties subject to the tax will be issued a VHT Notice at the end of March and payment will be due in three instalments in May, June and July.
Eligibility
Owners of properties in Toronto that are classified within the residential property tax class are required to declare the occupancy status of their property every year, even if they live there.
The tax does not apply to:
- properties that are the principal residence of the owner
- properties that are the principal residence of a permitted occupant or occupied by a tenant (including business tenants)
- properties that qualify for an exemption
How to Declare
Declarations of occupancy status can be submitted through the online portal[2] or by mail, either by the property owner or an authorized representative acting on their behalf.
To make the annual declaration, an owner will need the 21-digit assessment roll number and the customer number from the property tax bill or property tax account statement.
Under VHT, a property is considered vacant if:
- the property was not the principal residence of the owner or any permitted occupants or was not occupied by tenants for a total of six months or more;
- the property was not eligible for an exemption. Please refer to the table of Exemptions[3] under the portal; and
- the property was deemed vacant because the owner failed to submit a declaration of occupancy status or any required supporting documentation;
Deadline
Homeowners falling under this category must declare by February 29, 2024, for the 2023 calendar year to avoid penalties and interest.
Late Declarations, Fees, Fines & Penalties
If a declaration is not submitted by the deadline, the property will be deemed vacant and will be subject to the VHT. Effective January 1, 2024, a fee of $21.24 will be charged for failing to submit a declaration of occupancy status by the declaration deadline.
Upon default of payment, the unpaid amount will be added to the property tax roll for the residential property and will be collected in the same manner as property taxes.
Failure to submit a declaration of occupancy status by the deadline may result in a $250 fine. False declarations of occupancy status or failure to provide information when requested may result in a fine of up to $10,000, in addition to payment of the tax.
Appeal Process
A two-stage process is available to property owners who wish to have the outcome of their declaration reviewed. Homeowners can submit their Complaint/Appeal[4] online through portal.
Conclusion
Understanding the implications of the VHT is crucial for homeowners in Toronto, especially those who own vacant or underused residential properties. Identifying whether a property qualifies as a vacant residential property in Toronto is essential, and the consequences for failing to file on time can be significant. Stay informed to navigate the complexities of vacant home taxation and ensure compliance with the regulations outlined by the government.
For more information, pleased contact Pooneh at sooresrafil@gsnh.com.
These comments are of a general nature and not intended to provide legal advice as individual situations will differ and should be discussed with a lawyer.
[1] https://www.toronto.ca/services-payments/property-taxes-utilities/vacant-home-tax/
[2] https://www.toronto.ca/services-payments/property-taxes-utilities/vacant-home-tax/vacant-home-tax-declaration-of-occupancy-status/
[3] https://www.toronto.ca/services-payments/property-taxes-utilities/vacant-home-tax/
[4] https://www.toronto.ca/services-payments/property-taxes-utilities/vacant-home-tax/