Vacant Home Tax

Vacancy tax or Vacant Home Tax is a policy that encourages homeowners to not leave their residential properties unoccupied. This policy is applicable to any property that has been vacant for over 6 months. Vacant properties that are not subject to the Vacant Home Tax are the following:

1. Principal residences of owners - homeowners reside in the home for more than 6 months every tax year and are the principal resident.

1. Principal residences of permitted tenants - property is occupied by a tenant or resident for at least 30 days and considers it a principal residence.

1. Properties qualified for exemptions
• Property occupied by a permitted occupant as principal resident
• Unoccupied and determined occupied
• Property declared by homeowners as vacant under special circumstances

    The Vacant Home Tax in Toronto was proposed in 2017 as a way to resolve the housing crisis. This works by increasing the number of rental properties and decreasing the number of vacant properties in the city. Basically, the Vacant Home Tax charges property owners a tax for leaving their properties unused. 

    Since Toronto’s housing market has been going through a number of challenges over the years. The rate in which vacant homes are charged would depend on the value of the property, with higher rates being applied to homes valued at $3 million above.  Home owners who fail to pay these taxes will be charged certain penalties and fines. 

Pros

    Since homeowners would be incentivized to put their vacant properties on the rental market, the vacancy tax in Toronto may be a way to address the housing crisis of the city by increasing the availability of rental homes. This would make it easier for people to find affordable rental housing. Moreover, the Vacant Home Tax helps reduce the number of houses with damages and needed repairs in the city as the policy encourages homeowners to fix up the home for renting. 

Cons

    The Vacancy Tax also has some negative aspects. The policy may hold back property owners from investing in the city. This could slow down economic growth and provide less job opportunities. Some also view the Vacancy Tax as complicated and may cause homeowners to falsely label their properties as occupied to avoid being charged and paying taxes.

    The Vacancy Tax can be difficult to understand as there are opposing opinions on the matter. Nonetheless, the policy has the potential to resolve the housing crisis in Toronto by providing more rental housing opportunities and reducing the number of unused properties.