TORONTO VACANT HOME TAX 2022

In December 2021, the city of Toronto introduced a vacant home tax (VHT), that would begin to take effect in 2023 (for the 2022 tax year).

Background

In December 2021, the city of Toronto introduced a vacant home tax (VHT), that would begin to take effect in 2023 (for the 2022 tax year). The tax applies to single-family homes, apartments, and condominiums that are left unoccupied and unfurnished for more than 180 days in a calendar year and is levied at a rate of 1% of the property’s assessed value, in addition to regular property taxes. Property owners are to submit a declaration of their property‚Äôs occupancy status, and failure to do so will result in the property being deemed vacant.

How does this impact builders?

If builders have properties that are left unoccupied for 180 days or more in a calendar year without the required permits, they will be subject to the tax. With that being said, if builders anticipate that they will have to pay the VHT, it should be considered as a fixed cost going into the project.

The VHT may put increased pressure on builders to sell/rent their properties more quickly in order to avoid paying the tax.

It is important for builders in the GTA to carefully consider the implications of the VHT on their specific circumstances. They should be aware of the exemptions available (mentioned below) and ensure they are taking advantage of them where possible. Builders should carefully consider the tax and its implications.

Occupancy Status and Exemptions

The goal of the VHT is to increase the supply of housing in the city by discouraging property owners from leaving their properties unoccupied.

All homeowners are required to submit a declaration of occupancy status regardless of if the property is their principal residency. The tax does not apply to:

– Properties that are the principal residence of the owner

– Properties that are ethe principal residence of a permitted occupant or tenant

– Properties that qualify for an exemption

There are several exemptions that may allow the owner to declare the property vacant without incurring the VHT.

*If you do not have the required building permits (awaiting permits) then the tax will still apply to the vacant building

*If you have proof of severance or rezoning, you can upload the supporting documents under the land transfer exemption

For more details on the Toronto Vacant Home Tax please visit: https://www.toronto.ca/services-payments/property-taxes-utilities/vacant-home-tax/

Foremost Financial © 2024