Toronto City Council has voted to increase the vacant property tax to three per cent, which is projected to generate millions of dollars in additional revenue. The hike marks a two-per cent rise from the previous one per cent cap in 2022.
The purpose of vacant property tax, which was first approved in December 2021, is to “increase housing supply by discouraging owners from leaving their residential properties unoccupied,” according to the city. The three per cent taxation rate will be effective for vacancies occurring in the 2023 taxation year.
Mayor Olivia Chow announced that the city had voted in favour of the new tax rate in a tweet on Wednesday.
“Today, City Council increased the vacant home tax to 3%. We also approved my motion to use those additional funds to increase funding for acquiring existing buildings and making them permanently affordable. It’s a good first step. There is more to do,” the tweet said.
A property is considered vacant if it was “not used as the principal residence by the owner(s) or any permitted occupant(s), or was not occupied by tenants for a total of six months or more during the previous calendar year. Properties may also be deemed (or considered to be) vacant if an owner fails to make a declaration of occupancy status as outlined in the bylaw,” according to the city’s website.
Those who choose to leave their properties unoccupied will be subject to pay the tax.
The levy came into effect last year, and according to city council’s annual report findings, 2,336 homeowners declared their units vacant, and 44,902 properties failed to provide a declaration, resulting in them being deemed vacant at the time of billing. This represented approximately $283.7 million in possible revenue,” the city says.
However, as of August 1, 2023, the city says the number of properties deemed vacant has dropped to less than 17,500, as declarations were received through the Notice of Complaint process.
“To date, the City has collected $54M in VHT (Vacant Home Tax), which is consistent with the estimated and budgeted revenues for 2023,” the report said.
“…The assumption is that this additional $50 million in revenue will decrease by approximately 20 per cent annually in subsequent years as a result of the Program’s target outcomes in improving housing supply and reducing the number of deemed vacant units,” the report concludes.
Although all homeowners are required to submit a declaration of occupancy status, 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 tenant
- properties that qualify for an exemption
Revenues collected from the vacant land tax will be allocated to affordable housing initiatives, the city says.
