Empty homes face tax of one per cent of provincial assessment, but some do not, writes Bob Aaron. The deadline for declarations has been extended.
The City of Toronto vacant home tax has caught many owners by surprise, and understanding all of the available exemptions remains a challenge.
All owners of residential property were required to file a declaration of the 2022 occupancy status of their property by Feb. 2, 2023. Failure to file a declaration could result in a fine of between $250 and $10,000. I assume that the city’s legal department will be tasked with enforcement and that penalties and tax may automatically be added to the regular tax bill.
The city website now says: “The online declaration portal will accept late declarations even after the February 2 deadline. Homeowners are encouraged to make a declaration of their property’s occupancy status as soon as possible to avoid any penalties. Reminder notices will be mailed out the week of February 13 to property owners who have not yet submitted a declaration.”
No tax is payable if the property was vacant: due to the death of an owner; if it was undergoing extensive repairs; if the owner was in a hospital, long-term or supportive care facility for at least six months (but only for a maximum of two years); if the property was purchased in the previous year; or if it was required for occupation for employment purposes for at least six months and the owner lives elsewhere.
If a home was, in fact, empty last year, and does not fall under these specific exemptions, there is a tax of one per cent of the current provincial assessment.
The residence of someone in long-term care for more than six months in each of three or more years will be subject to the vacancy tax and they may be forced to sell or rent the property.
Although the tax does not apply to apartment buildings, it does apply to condominiums and affects residential units owned by the condominium and used as a property management office.
Units owned by snowbirds who spend more than six months away from their principal residence are also exempt.
A residential unit is subject to the full vacancy tax if it is used as a pied-à-terre for business or leisure purposes and is not the owner’s principal residence or occupied by a friend or family member of the owner or tenant for more than six months of the year.
An owner must have an assessment roll number for a residential unit in order to make the required declaration so new purchases from builders are exempt until they are assessed. If a condominium is registered mid-year and is subsequently sold to the first owner, it is exempt from the tax if the purchase occurred during the previous calendar year.
Special rules exist for units in co-operative and co-ownership buildings where the entire building receives one tax bill and the individual units are not separately assessed.
Although not explained on the city’s website, only a single declaration form has to be submitted for the entire building — typically by the board or property manager. As long as at least one of the units is occupied, the property is not considered vacant and no tax applies.
If the declaration was not filed, I assume that the building would be subject to a non-filing penalty and a tax on the value of the entire multi-unit building.
The vacancy tax continues to be a work in progress as the city’s media department issues clarifications and explanations not initially available on the municipal website.