Finding affordable housing in Toronto is a challenge for many residents. The city has now implemented a Vacant Home Tax (VHT) similar to the one in Vancouver, B.C.
The goal of the VHT is to free up more living space. It will be an annual declaration for all Toronto homeowners. Revenue generated by the tax will go towards supporting affordable housing initiatives.
In the five years since Vancouver’s Empty Home Tax took effect, the number of vacant properties has dropped to 1,398, a 36% reduction in empty homes compared to its first year.
Toronto homeowners are now required to declare the status of their property from the previous year. This can be done through an online portal on the city’s website or via a printout that can be mailed.
This year’s deadline was officially February 2, 2023. However, that date has since changed.
Not Everyone Has Complied
New taxes are never popular, and new policies take time to get everyone on board.
It should be noted that approximately 15% of Toronto residents have yet to respond to the initial request. This has prompted the city to extend the deadline to the end of the month.
The revised deadline to declare is now February 28, 2023.
If you are deemed responsible for the tax, you will receive notice in March or April. Payments are due on or before May 1, 2023.
How the Vacant Home Tax Works
The Vacant Home Tax applies to the status of your property for the previous year. The tax is 1% of the current value assessment.
For example, a million-dollar home will be taxed $10,000 if it is deemed to have been vacant for 6 months or more in 2022.
If you fail to declare on time or you’re missing the necessary supporting documentation, your residence will also be subject to the tax. Failure to respond or false declarations may also result in additional financial penalties ranging from $250 to $10,000.
Are there Exemptions?
Not every vacant property is subject to taxation; however, supporting documentation needs to be provided to substantiate your claims. Exemptions include:
- The owner passed away
- The property was undergoing renovations
- The principal resident was under medical care away from home
- Certain matters pertaining to the transfer of legal ownership
- The owner required the property for full-time employment (for at least 6 months) and resided outside the GTA
- A court order prohibiting occupancy was in place
Implications when selling a property
As a purchaser you will need an experienced real estate lawyer to assist you with your closing in order to ensure that the Seller completed the necessary declarations as failure to do so may result in the Purchaser assuming responsibility and liability for the Seller’s failure to declare and/or pay the applicable vacant tax.
The lawyers at Vakili Law Group take their responsibilities seriously and have implemented many measures to ensure all their clients are protected from the Seller’s failure to complete the necessary declarations.
You May be Audited
Be advised that any declaration you submit may be questioned and subjected to an audit.
Any documentation relating to your declaration must also be retained for a period of 3 years.
Whether the new tax rightfully affects your Toronto-area property or not, you are obligated to respond.
Filing a Notice of Complaint
Did you miss the yellow notice that arrived at your home first announcing the tax? Have other circumstances prevented you from responding?
If you’ve been wrongfully billed for property that was rightfully occupied or exempt, you may want legal counsel to intervene on your behalf.
A Notice of Complaint can be filed. The city will then review the decision indicated in the Supplementary Assessment Notice. This request is completed through the city’s online portal.
You will receive a written response from the city within 30 days of their determination.
If you disagree with that decision, you do have the right to appeal. Again, you are free to have someone file on your behalf. The Appellate Authority will then have 90 days to review your case.
You will be notified of their decision within 30 days. At this point, the appeal decision is considered final.
Do You Have Concerns?
In business since 2010, Vakili Law Group in Thornhill, Ontario, specializes in real estate law.
The firm prides itself on not just offering experienced legal representation, but the manner in which they vigorously defend their clients’ rights.
If you have a question about the vacant home tax or any other real estate law matter, please contact our experienced lawyers at 647-352-2245 or contact us via email at Contact us today.
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