The City of Toronto has introduced a Vacant Home Tax (VHT) to increase the availability of residential properties in the city’s tight housing market. This measure is part of the broader initiative to encourage owners to either rent out unoccupied homes or sell properties that are not being used as primary residences. Below is an overview of the key details regarding the Vacant Home Tax, its purpose, and how it may affect you as a Toronto homeowner.
What is the Vacant Home Tax in Toronto?
The Vacant Home Tax (VHT) in Toronto is a municipal tax imposed on residential properties that remain unoccupied for an extended period—generally more than six months—within a calendar year. Established under the City of Toronto Municipal Code Chapter 778, Taxation, Vacant Home Tax, enacted by Bylaw 97-2022, its primary goal is to increase housing availability by encouraging owners of vacant properties to either rent them out or sell. If a property is determined to be vacant and does not qualify for an exemption (such as major renovations, the death of the owner, or certain medical circumstances), the owner must pay the tax, which is currently set at one percent (3%) of the property’s Current Value Assessment (CVA). All homeowners in Toronto are required to file an annual declaration of their property’s occupancy status; failure to do so may result in the property being deemed vacant and subject to tax.
Definition of Vacant Unit
Under City of Toronto Municipal Code Chapter 778 (By-law 97-2022), a residential property is generally considered vacant if it remains unoccupied for more than six months during a calendar year and does not qualify for any recognized exemptions. Specifically, the property must not be used as a principal residence by the owner (or other permitted occupants) and must not be subject to a written or oral tenancy agreement during that period. Owners are required to declare their property’s occupancy status annually, and if the City deems a property vacant without a valid exemption—such as a major renovation under a valid building permit, medical or supportive care needs, or the death of the owner—the Vacant Home Tax will apply.
Eligible Exemptions for Vacant Properties
According to Toronto’s Vacant Home Tax Website, a property may be left vacant and be exempt from the Vacant Home Tax if one of the following criteria is met:
| Eligible Exemption | Criteria | Supporting Documentation Required |
|---|---|---|
| Death of a registered owner | The property was vacant for six months or more in the taxation year due to the death of an owner. This exemption may be claimed for up to three consecutive taxation years if the owner of the vacant unit died in the taxation year or in the two previous taxation years. | Copy of death certificate. |
| Principal resident is in care | The principal resident of the vacant property is in a hospital, long term or supportive care facility for at least six months during the taxation year. This exemption may be claimed for up to two consecutive taxation years. | Signed letter from health care facility on letterhead; and proof of principal residence at the subject property prior to entering care. |
| Repairs or renovations | The vacant property is undergoing major repairs or renovations, and all of the following conditions have been met: Occupation and normal use of the vacant property is prevented by the repairs and renovations for at least six months of the taxation year.All necessary permits have been issued for the repairs and renovations. The City is of the opinion that repairs or renovations are being actively carried out without unnecessary delay. | Description of the project preventing occupancy, along with any supporting documents (for example, work orders, contractor receipts); and copy of building permits issued related to the repairs and renovations (if applicable). |
| Transfer of legal ownership | The closing date of the purchased property was in the taxation year being declared. The sale involved a 100 per cent transfer of the property. This excludes name changes, adding a second owner and removing a second owner. | Copy of land transfer deed. |
| Occupancy for full-time employment | The vacant unit is required for residential purposes because the owner or their spouse is employed full-time in Toronto for at least six months during the year. The owner must have a principal residence outside of the Greater Toronto Area. | Proof of residency outside of the Greater Toronto Area; and signed letter from employer on company letterhead, or employment contract that confirms requirement of physical presence in Toronto for the purpose of work. |
| Court order | There is a court order in force which prohibits occupancy of the vacant property for at least six months of the taxation year. | Copy of court order. |
| Vacant new inventory | New exemption beginning 2023: This exemption can be claimed by the developer of a newly constructed residential unit for up to two consecutive years if all of the following conditions have been met: The residential unit was not occupied as a residence at the end of the last business day of the taxation year for which the property is being declared, and was not occupied for residential purposes since it was constructed. The residential unit was actively offered to the public for sale in the taxation year for which the property is being declared. The owner of the residential unit is the developer of the residential unit. | Sales listing from the taxation year for which the property is being declared; andproof that the registered owner is the developer. |
| Secondary residence for medical reasons | New exemption beginning 2024: The vacant unit is required by the owner, their spouse or dependent for medical reasons, and the principal residence is outside of the Greater Toronto Area. | Proof or residency outside the Greater Toronto Area; and completed Vacant Home Tax Medical Treatment Certificate Form . |
| *Please do not provide personal medical documents or photographs as supporting documentation. | ||
Vacant Home Tax Calculation
Properties issued a bill for the 2022 and 2023 taxation years, were taxed 1% of the property’s Current Value Assessment. Beginning with the 2024 taxation year, the tax rate will increase to 3% of the Current Value Assessment.
The Vacant Home Tax (VHT) is calculated based on the Current Value Assessment (CVA) of the residential property. For the 2024 taxation year, the tax rate is set at 3% of the CVA. This means that if your property was deemed vacant in the previous year, you will need to pay 3% of its assessed value as the VHT.
How to Calculate the 2024 Vacant Home Tax
The tax is calculated as follows:
VHT = 3% × Current Value Assessment (CVA)
Example Calculation
If a home’s CVA is CAD 1,000,000, and it is deemed vacant for more than six months in 2024, the VHT would be 3% x 1,000,000 = $30,000
This amount is in addition to the regular property tax bill.
Therefore, you would owe $30,000 in VHT for that taxation year. It’s important to note that this tax is payable in the year following the year in which the property was vacant.
How To Declare
The City’s online portal is secure and the quickest way to submit a declaration. There are other methods to declare such as by phone or in person.
Summary
The Vacant Home Tax (VHT) in Toronto is a policy measure aimed at increasing the availability of residential properties by discouraging prolonged vacancies. With the 2024 tax rate set at 3% of a property’s Current Value Assessment (CVA), homeowners must submit annual declarations on time and ensure compliance to avoid unnecessary financial penalties. While exemptions exist for certain circumstances such as major renovations or medical care, failure to declare can automatically be considered vacant. The tax is designed to encourage property owners to rent, sell, or occupy their properties to create a more accessible housing market in Toronto. Homeowners should utilize the City of Toronto’s Vacant Home Tax Page for declarations and seek professional advice.
A real estate lawyer in Toronto can guide and advise you before you make a purchase decision and help you understand the legal implications of vacant home tax.
The information provided above is of a general nature and should not be considered legal advice. Every transaction or circumstance is unique, and obtaining specific legal advice is necessary to address your particular requirements. Therefore, if you have any legal questions, it is recommended that you consult with a lawyer.
