The City of Toronto recently announced the rules for the implementation of the Vacant Home Tax. Effective January 1, 2023, all residential property owners in Toronto will be required to submit a declaration of the occupancy status of their property for the previous year. The deadline for declaring the 2022 occupancy status of a property is February 2, 2023. The online declaration platform will open in mid-December 2022. An annual tax will be levied on vacant residences in Toronto, payable beginning in 2023.
What kind of property is considered a vacant home?
A property will be considered vacant if it has not been occupied by a tenant, myself or a family member, and a friend for more than six months in the previous calendar year. Exemptions may be granted in the following special circumstances.
· Death of the homeowner.
· Homes under renovation (renovations are actively underway without unnecessary delay)
· The vacant property is required to have been occupied for employment purposes for less than 6 months during the tax year
· The homeowner is receiving medical care (this exemption can be claimed for up to two consecutive tax years)
· Transfer of Legal Ownership You purchased the property in the previous year and the sale involved the transfer of 100% of the interest in the property. This does not include name changes, the addition of a second owner, or the removal of a second owner.
· Court Orders There is a court order in effect that prohibits occupying a property that is vacant for at least six months during the tax year.
How the Vacant Home Tax rules work?
1, Mandatory declaration of occupancy status
All residential property owners in Toronto will be required to declare the status of their property annually by the deadline, even for owner-occupied properties. There are two ways to file: 1) online (the filing website will be available in mid-December 2022) and 2) by calling 311 to obtain a paper filing form from municipal services. The declaration must be made by the homeowner or someone acting on the homeowner’s behalf. The return will determine whether the vacant home tax is applicable and payable. An owner-occupied property can be left unoccupied for up to six months during the entire tax year without paying tax.
The City of Toronto has information on all properties, and it is easy to find out if a property is not declared, so don’t take any chances.
2. Calculation of Vacant Home Tax
All residences in Toronto that have been declared, deemed or determined to be vacant for more than 6 months in the previous year will be assessed a vacant home tax of 1% of the Current Value Assessment (CVA). For example, if the CVA value of your property is $1,000,000, the tax payable would be $10,000 (1% x $1,000,000). (The CVA is the City’s assessed value of the property, and the land tax is calculated based on the CVA.)
This tax is based on the occupancy status of the property in the previous year. For example, if the house is vacant in 2022, the vacancy tax will start to be paid in 2023
3, How to submit the declaration
A 21-digit assessment roll number and customer number from the tax bill or property tax account statement are required to be filed online or on paper. The declaration must be completed and sent in by the deadline to avoid penalties and being considered a vacant property. Incomplete forms will not be accepted. If you choose to mail the form, please be aware of Canada Post’s delivery times. For residential properties that are occupied but not occupied by the owner, the owner will be required to submit information about the tenant and/or permitted occupant at the time of filing. Properties that are not declared will be defaulted to vacant properties and will be subject to vacancy tax. Owners who fail to submit a declaration or make a false statement will be subject to a penalty of $250-$10,000. Property owners who are deemed vacant and not qualified for exemption will be required to pay the vacancy tax. Property owners who are liable for the tax will receive a vacant property tax notice in March/April and will pay it on May 1.
The City will randomly select a number of properties for audit. The owners of selected properties will be required to submit a series of documents to prove that the property is occupied. These documents include but are not limited to: driver’s licenses, bank statements, credit card statements, utility bills, lease agreements, etc.
4. Who is responsible for declaring the property for the current year’s closing
If the closing date is between January 1 and February 2, the seller is responsible for filing the previous year’s declaration form because the seller has a better idea of the occupancy status for the previous calendar year. If the closing date is between February 3 and December 31, the buyer is responsible for filing the return. If the delivery date is between January 1 and February 2, the seller needs to give the buyer a declaration attachment and ensure that the declaration submitted is true and complete.
5, How to pay Vacant Home Tax
· City website
· Online Banking
· Mail a cheque : Address: Treasurer, City of Toronto, Box 5000 Toronto, ON M2N 5V1
The purpose of the City of Toronto’s vacant home tax is to help the supply and affordability of housing in the market by discouraging homeowners from leaving their properties vacant and increasing government tax revenue. Detailed information can be found on the City of Toronto’s website: https://www.toronto.ca/services-payments/property-taxes-utilities/vacant-home-tax/