Vacant Home Tax Takes Effect January 3, 2023.

As of January 1st, unless homeowners qualify for one of the exemptions, Toronto residential properties that are vacant for a total of more than six months in a calendar year may be liable to the new Vacant Home Tax (VHT) imposed by the city. The VHT was established to increase the city's housing supply. If you are a homeowner, you may have already received your VHT Declaration form in the mail. It's a yellow sheet, and takes a few minutes to complete. 

What You Need To Know

1. Property owners will be required to submit a declaration form by February 2, 2023.
2. If a property is not the owner's primary residence, is not occupied by any permitted occupants, was vacant for at least six months in the preceding calendar year, or otherwise qualifies as vacant under the bylaw, it is deemed vacant.
3. The VHT tax is 1% of the home's current value assessment (CVA).
4. Principal residence, death, repairs, properties undergoing substantial renovations, owners who are receiving care or who are hospitalised, court orders, transfers of legal title, and occupation for full-time employment are among the exclusions.

What You Need to Know During Change of Ownership

The Vacant Home Tax affects both buyers and sellers in real estate transactions.

1. It is the duty of the buyer and the seller to take the necessary steps to guarantee that the declaration has been filed.
2. Any unpaid taxes will be the responsibility of the buyer and will form a lien on the property.
3. Because only the seller will be aware of the property's occupancy status for the previous year, if a closure takes place between January 1 and the closing of the declaration - February 2, the seller must complete the declaration before the closing. If a closing occurs after the declaration period – February 3 to December 31 – the buyer must submit a declaration in the following year. The buyer qualifies for the “transfer of legal ownership” exemption.
4. The buyer must submit a declaration the following year if the closing takes place outside of the declaration window, which is from February 3 to December 31. The "transfer of legal ownership" exemption applies to the buyer.
5. The buyer must receive a copy of the fully filled-out and submitted property status declaration from the seller.
6. At closing, the seller must present a statutory statement attesting that the property status declaration filed is genuine and accurate.

The VHT works to increase the housing supply by deterring property owners from leaving their homes vacant. Owners who decide to keep their homes empty will be subject to this tax. Or to learn more, click here.