Exploring the Vacant Home Tax Landscape in Ontario

The notion of another tax gouging scheme has been implemented on us yet again by our government. This vacant Home tax is gaining momentum in various cities across Ontario, including Toronto, Vaughan, Markham, York Region, Mississauga, and Hamilton. As the housing crisis intensifies with soaring prices, our government’s greedy and opportunistic brains are taking sneaky and proactive measures to discourage the practice of leaving homes empty. In this article, we will delve into the concept of a vacant home tax, its implementation, and key considerations for navigating this evolving landscape.

Understanding Vacant Home Tax

Definition

A vacant home tax is a levy imposed on residential properties that remain unoccupied for a specific period, usually six months in a calendar year. The primary goal is to dissuade homeowners from leaving properties vacant, thereby bolstering the housing supply and potentially mitigating housing costs.

Operational Mechanism

Homeowners are typically required to self-declare the occupancy status of their properties. Failure to report can result in significant fines. For instance, in Toronto, the tax rate is set at 1% of the property's current value assessment. In Peel Region, a proposed tax may range from 1-3%.

Toronto's Vacant Home Tax

In Toronto, property owners must annually declare the occupancy status of their properties. The tax, set at 1% of the Current Value Assessment (CVA), applies to homes vacant for over six months in the previous year. Declarations can be submitted online or through a paper form, and non-compliance may lead to fines ranging from $250 to $10,000.

Vacant Home Tax in Other Regions

Vaughan, Markham, and York Region

While still in the consultation phase, these areas are closely monitoring the implementation in Toronto and may consider adopting similar measures.

Mississauga and Hamilton

Mississauga is contemplating a vacant home tax in its early stages, while Hamilton is scheduled to implement one starting in 2024.

Exemptions and Special Cases

Exemptions

Certain exemptions apply to the vacant home tax, including:

• Death of a registered owner
• Repairs or renovations
• Principal resident in care
• Transfer of legal ownership
• Occupancy for full-time employment
• Court order prohibiting occupancy
•  

• Underused Housing Tax (UHT)

The Canadian government and the Department of Finance have introduced an Underused Housing Tax (UHT) effective from January 1, 2022, aimed at regulating housing supply and demand.

Tax Credits

Some provinces may offer tax credits for homeowners declaring a second property or home not used as the principal address. Council-approved empty homes and homeowners may be eligible for a tax credit of approximately CAD 2,000 on a secondary home or property.

Where, When How to Declare?

Deadline February 29, 2024

Penalties/ Fines If a declaration is not submitted by the deadline, the property will be deemed vacant and will be subject to the Vacant Home Tax. Effective January 1, 2024, a fee of $21.24 will be charged for failing to submit a declaration of occupancy status by the declaration deadline.

Interest charges will apply to any overdue Vacant Home Tax amount at a rate of 1.25 per cent on the first day of default and on the first day of each month thereafter, for as long as taxes or charges remain unpaid.

Upon default of payment, the unpaid amount will be added to the property tax roll for the residential property and will be collected in the same manner as property taxes.

A Dishonoured Cheque Processing / Non-Sufficient Funds (NSF) fee will be applied to all payments that are not honoured by a financial institution.

Failure to submit a declaration of occupancy status by the deadline may result in a $250 fine. False declarations of occupancy status or failure to provide information when requested may result in a fine of up to $10,000, in addition to payment of the tax.

Here is the website for your convenience

VACANT HOME TAX DECLARATION  WEBSITE LINK