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Will you have to pay Toronto’s new Vacant Home Tax?

Jan 7, 2023 | 2023 Toronto Star Property Law Columns

By Bob Aaron
Toronto Star contributing columnist

The 1 per cent charge on homes that go unoccupied for more than 6 months of the previous year is still a work in progress, write Bob Aaron.

The City of Toronto’s new Vacant Home Tax is now in effect on Toronto residences. With certain exemptions, the tax applies to units if they are unoccupied for more than six months during the previous calendar year.

Unless the current exemptions are clarified, many unsuspecting property owners will be hit by the one per cent annual tax.

Most large apartment and condominium buildings, for example, have a residentially-zoned unit for use as a property management office. Those units will be taxable unless they do not have a kitchen.

Another exemption for houses, condos and apartments under construction or renovation requires a certificate from the chief building official certifying that the work is being carried out without unnecessary delay. This certificate should be obtained before filing the vacancy declaration. Just how quickly that certificate may be available is a matter of debate.

On the city’s website at press time, an exempt tenanted property was defined as one occupied for residential purposes under a written tenancy agreement for at least 30 days. There is no explanation about how to treat the thousands of Toronto units that do not have a written lease.

This definition also seems to catch short-term rentals, such as Airbnb, which may be occupied for most of the year but with leases for less than 30 days. They may also be subject to the vacancy tax.

Under the bylaw, the property where a resident lives and conducts daily affairs is treated as a principal residence. But the city says a person can only have one principal residence.

Snowbirds, students and others who study or travel abroad for extended periods of time will not be subject to the tax on their principal residence.

But separate residential home offices and studios for musicians or artists will be taxable if they have a kitchen. Those units, which have residential zoning but are not the principal residence of the owner will be caught by the tax.

One Star reader wrote me to say that he has been living in his Toronto home for more than 30 years, but is the sole caregiver for his elderly parents who live elsewhere. He cannot afford to pay for others to look after his parents and has to spend more than six months a year taking care of them in their own home.

It appears the reader’s unit will be exempt from the vacancy tax, despite his extended absence. But the exemption seems to conflict with the intention of the very limited exemption for vacant units where the principal resident is in a hospital or long-term care facility for up to six months during the year. They are exempt.

Yet where a resident is in long-term care for more than six months, it appears his or her home will be subject to the tax.

In response to a long list of questions I sent last week to the City of Toronto’s media relations department, Casey Brendon, the city’s director of revenue services, advised: “The Vacant Home Tax cannot force a property owner to sell or rent out their unit.”

I have my doubts.

The bylaw is still a work in progress. For questions, call 311 or your city councillor.


Contact Bob Aaron

Bob Aaron is a Toronto real estate lawyer and frequent speaker to groups of home buyers and real estate agents.
He can be reached by email at bob@aaron.ca, phone 416-364-9366 or fax 416-364-3818.

Aaron & Aaron specialize in Real Estate Law, specifically Sale of Rental, Condominium, Residential, Rural Recreation, Offer to Lease, Commercial, and New Construction

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