Toronto’s Vacant Home Tax (“VHT”)

What is Toronto’s Vacant Home Tax (“VHT”)?

The City of Toronto will levy Vacant Home Tax of 1% on unoccupied residential property(s), with the goal of increasing housing supply by discouraging owners for their properties vacant. Revenues from the VHT will be allocated to Toronto’s affordable housing initiatives.

Key definitions

Toronto’s Vacant Home Tax or British Columbia’s Speculation and Vacancy Tax are similar but separate municipal

This article will outline the VHT in easy-to-understand terms, however, it is useful to understand key terms when reading about the VHT online:

  • Residential Property: a property classified as a residential property on the most recent assessment roll.
  • Principal Residence: a “Residential Unit” in which the person ordinarily resides. A person may have only one “Principal Residence”, but a “Principal Residence” may have multiple persons.
  • Residential Unit: a property that contains one or more “Self-Contained Units”.
  • Self-Contained Units: a unit that contains a dedicated washroom and kitchen.
  • Vacant Unit: a “Residential Unit” which is unoccupied for more than 6-months in any given year by either the Owner, another Occupant or Tenant.
  • Owner: a registered legal owner of a “Residential Unit”
  • Occupant: any person occupying a “Residential Unit”, other than the “Owner”
  • Tenant: a person occupying a “Residential Unit” under lease or sublease for a consecutive term of at least 30-days.

Do you need to file?

All Residential Property Owners in Toronto are required to declare the occupancy status of their property(s) annually, even if it is their Principal Residence. 

Declarations must be made by the homeowner or someone acting on behalf of the owner. 

The City of Toronto’s online portal to declare a property’s occupancy status will open in the fall, and is due February 2nd of the year following the tax year in respect to where the declaration is made.

If you missed the deadline to file, you must submit a Notice of Complaint to the City of Toronto (see below for further information).

Do you need to pay the tax?

Occupancy Status of Residential Property are classifications in your filing with the City of Toronto, which determine whether it is vacant, and therefore subject to VHT. 

If you fit one of the below criteria – then you do not need to pay the tax. A Residential Property is vacant if it is not:

  • a place where you reside and conduct your daily affairs for at least 6-months;
  • a place where you allow your family or friends to stay;
  • occupied by a tenant for at least 30-days; or
  • eligible for an exemption.

The exemptions are limited circumstances where the Residential Property may be left unoccupied or vacant, and still be exempt from the VHT:

  • the owner died, and the property is vacant for 6-months;
  • it is undergoing repairs or renovations, and you meet the following conditions:
    • you cannot occupy due to repairs and renovations;
    • all permits have been issued; and
    • the city’s officials do not believe you’re unnecessarily delaying the repairs or renovations.
  • the owner is in the hospital or long-term care for at least 6-months (you can only claim this for 2 consecutive years);
  • recently purchased and closed in the year from an unrelated person, which 100% interest in the property was transferred (name changes and/or adding or removing a secondary owner does not qualify);
  • the property is required for employment purposes for at least 6-months of the year by its owner who has a principal residence outside of the Greater Toronto Area; or
  • there is a court order prohibiting occupancy for at least 6-months of the year.

Acquisition and disposition of Residential Property

VHT has implications for both the purchaser and vendor on acquisition and disposition of Residential Property:

PurchaserVendor
– Ensure declaration for VHT has been filed
– Liability for any unpaid taxes will be assumed
– Transactions closing between February 3 – December 31, must complete declaration in the following year; qualifies for transfer of legal ownership exemption
– Ensure declaration for VHT has been filed
– Provide a statutory declaration at closing confirming the filed property status declaration is true and correct
– Transactions closing between January 1 – February 2, must complete declaration prior to closing
– Provide a copy of the completed and filed property status declaration to the Purchaser

Calculating and paying VHT

The VHT calculation is: 1% x Current Value Assessment (“CVA”) per your Municipal Property Assessment Corporation (“MPAC”) property assessment notice

The tax is based on the previous year, i.e., if the home is vacant in 20X2, it will be payable in 20X3. Owners subject to the VHT will be issued at notice at the end of March, with payment due in three instalments in May, June, and July.

For example, if your CVA value is $1,500,000 in 20X3 the tax will be 1% x $1,500,000 = $15,000, which will be payable in three instalments of $5,000 in May, June and July 20X4.

Payments can be made through:

  • MyToronto Pay;
  • Your financial institution, through online banking;
  • Drop box post-dated cheques or money orders 
  • Mail post-dated cheques to: Treasurer, City of Toronto, Box 5000, Toronto, ON M2N 5V1

Ensure payments are made on or before the due date, the City of Toronto calculates interest on overdue payments at 15% per annum.

Penalties

Failure to file a declaration of occupancy status, or if you make a false declaration, may result in a fine of $250 – $10,000.

What do you need to prepare for your VHT filing?

  • 21-digit assessment roll number from your property tax bill or property tax account statement
  • Customer number from your property tax bill or property tax account statement
  • Analysis on whether or not you are required to pay VHT for your property
  • Supporting documentation to substantiate your declaration of occupancy status (see below)

Enforcement and supporting documentation

Under the by-law, the City is authorized to audit or examine documents relating to your Residential Unit, and any exemption made on your statutory declaration.

Types of supporting documentation you should keep include, but are not limited to:

  • Ontario vehicle registration and vehicle insurance documentation 
  • Government-issued personal identification, including driver’s license and Ontario Identity Card
  • Income tax returns and income tax notices of assessment 
  • Lease agreements 
  • Wills, grants of probate, or grants of administration 
  • Employment contracts, pay statements or records of employment
  • Insurance certificates for homeowner’s or tenant’s insurance
  • Statutory declarations or affidavits regarding the occupancy status and exemptions

Notice of Complaint

A Notice of Complaint can be filed either online or via mail (City of Toronto, Revenue Services, Vacant Home Tax Complaints/Appeals, 5100 Yonge St., Toronto, ON M2N 5V7) if:

  • you missed the filing deadline to declare your property’s occupancy status;
  • you made an error; or
  • you want to dispute the City’s assessment of VHT.

Your complaint needs to include:

  • 21-digit assessment roll number from your property tax bill or property tax account statement;
  • Customer number from your property tax bill or property tax account statement;
  • Contact information including full name, phone number or email address;
  • Reason(s) why you are not subject to VHT (ex., claiming a valid exemption); and

The City may follow-up with your Notice of Complaint and ask for supporting documentation, as noted above, ensure these are submitted by the prerequisite timelines in order to be considered.