Beginning early next year, vacant Toronto properties will be subject to a 1% tax at the end of the calendar year with the enaction of the new by-law. The vacancy tax will apply to all residential homes that are underused or not used as the owner’s principal residence. The tax will be imposed on properties that remain unoccupied for more than six months starting in 2022. Vacant principal residences are exempted from the tax. The tax rate will be 1% of the house or property’s current value assessment. For example, if a home that was declared vacant was assessed at $1 million in 2022, the owner would be subject to a $10,000 annual tax.

A property will be considered “vacant” if it is unoccupied for more than six months during the previous calendar year or is otherwise deemed to be vacant under the bylaw. Residential property owners will be required to make a declaration each year by the deadline and could be subject to a city audit to verify whether the home is vacant or not.

According to the City of Toronto website: “The prime objective of the tax is to reduce the prevalence of residential properties left vacant that might otherwise be used to increase housing availability and affordability.”

The upcoming vacant home tax can have an implication on estate administration. Sometimes estate administration may be delayed, for example due to litigation. If any of the properties in the estate remain vacant for a prolonged period, they may be subject to the new vacant home tax. As always, it is the responsibility of the estate trustee to ensure that all property fees and taxes are duly paid on time. We encourage estate trustees to seek legal advice to determine if the new vacant home tax may apply. 

Thanks for reading!

Sara Moledina