On February 3, 2022, the City of Toronto passed By-Law 97-2022, which has implemented a new Vacant Home Tax (the "Tax") with the goal of increasing the supply of housing by taxing homeowners for leaving their residential properties unoccupied.
All residential home owners will have to submit a declaration of occupancy status (the "Declaration") to the city by February 2, 2023. Homeowners must declare whether the property was vacant for the previous tax year and if so, whether it qualifies for an exemption. Those homeowners who declare their property as vacant are subject to a tax of 1% on the current value assessment of the property.
What is considered a Vacant Property?
Under the new By-Law, a property is considered vacant if it was not used as the principal residence by the owner(s) or any permitted occupant(s) (such as tenants), or was unoccupied for a total of six months or more during the previous calendar year.
The By-Law also 'deems' a property a vacant property, and therefore subject to the Tax, if a homeowner: (1) fails to make the occupancy declaration required, or (2) fails to provide information or evidence demanded by the City pursuant to the By-Law.
The Tax does not apply to vacant property that does not contain a residential unit, for example, a parking spot or condominium locker. A residential unit is defined in the By-Law as a self-contained unit that includes a washroom and kitchen.
Exemptions from the Tax:
The By-Law provides that a homeowner with a vacant property will be exempted from the Tax where:
- The owner has died in the taxation year or in the previous taxation year;
- The vacant property is undergoing repairs or renovations, and
the following conditions have been met:
- Occupation and normal use of the vacant property is prevented by the repairs or renovations for at least six months of the taxation year;
- All requisite permits have been issued for the repairs or renovations; and
- The City's Chief Building Official is of the opinion that the repairs or renovations are being actively carried out without unnecessary delay;
- The principal resident, being the owner or the tenant of the property, is residing in a hospital or long term supportive care facility for a period of an aggregate of at least six months during the taxation year; Note: this exemption may apply in respect of up to two consecutive taxation years
- Legal ownership of the property has been transferred to an arm's length transferee in the taxation year;
- The vacant property is required for occupation for employment purposes for an aggregate of at least six months in the taxation year, by its owner who has a principal residence outside of the Greater Toronto Area; or
- A court order is in force which prohibits occupancy of the vacant property for at least six months of the taxation year.
If a property is a 'deemed' vacant property under the By-Law, then notwithstanding the above exemptions, the property is still taxable.
Making a Declaration:
Residential property owners should make their Declaration through the City's online declaration portal. Homeowners can also complete a paper declaration form that they may have received in the mail or can be downloaded online. However, the paper form must be completed in full and received bur the City before February 2, 2023 to avoid the late fine.
Fines and Offences
If the Declaration is made late, the City will fine the homeowner $250. Homeowners may submit the Declaration late and based on their response, they may receive a supplementary Vacant Home Tax Notice
The following acts constitute an offence under the By-Law:
- Fails to make a declaration as required;
- Makes false or deceptive statements in a declaration or document prepared, submitted or filed under for the purpose of the By-Law;
- Destroys, alters or disposes of any records in order to evade payment or remittance of tax;
- Fails to comply with or interferes with audits and inspections;
- Wilfully evades or attempts to evade paying tax;
- Conspires with any person to commit an offence described above.
Every person who is guilty of an offence under the By-Law may be subject to a special fine between $250-$10,000, that is deemed by a court appropriate to eliminate or reduce the possible economic advantage that a person may otherwise receive by contravening the By-Law.
Auditing under the By-Law
The By-Law grants powers to persons authorized by the City for purposes of administration or enforcement to audit or examine the books and records that relate to the occupancy of a property and any exemption. The power may require a property owner to give all reasonable assistance with the audit, to answer all questions relating to the audit and to attend at the premises or place with the auditor for the purpose of giving reasonable assistance and answering questions relating to the audit.
If you own residential property in Toronto, be sure to submit
your completed Declaration before February 2, 2023 to avoid any
Written with the help of Stephanie Lanz, Articling Student at Robins Appleby
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.