Homeowners Beware: A New Tax will be Implemented in 2022 for Vacant Housing Units
Homeowners in the City of Toronto will be hit with an additional tax starting as soon as January 1, 2022, if any residential homes are left vacant.
After a city council vote of 24-1 on July 15, 2021, council officially approved a 1 per cent tax penalty to owners of uninhabited residential properties located within the City. This decision comes with the hope to slow down the burning hot housing market by encouraging foreign investors, who have put stake into the City’s real estate market, to lease out their Toronto-based housing units to residents working and living within the municipality. The aim is to supply people with homes, versus using the housing market as a commodity. In addition, the City is anticipating between $55 to $66 million in gross tax revenue per year, which will be used to fund future affordable housing initiatives. The actual revenue will start to be realized in 2023 based on homeowner declarations for the 2022 calendar year.
This comes off the success found in the City of Vancouver, where they implemented their own vacant home tax in 2018, which pressured the owners of otherwise off-the-market real estate properties, to place those untouched residential units into the market as a leasing option. It has been reported, since the issuance of Vancouver’s new tax, the number of unoccupied dwellings has dropped by 25 per cent, the City has collected up to $61.3 million in funds, and over 5,000 additional condo units have been placed onto the rental market. In fact, Vancouver has already increased its empty homes tax rate this year from 1.25 per cent to 3 per cent.
As stated in Toronto’s new by-law, a home will be considered ‘vacant’ if the unit remains uninhabited for more than 6 months within a calendar year. Property owners will be required to declare the status of every residential property they own, each year, and state the property’s occupancy status. Therefore, the City will place the onus on property owners to declare each home’s status and file their taxes accordingly.
For more information contact a corporate lawyer at Kalfa Law.
-Vida Korhani, Associate Lawyer
Vida’s practice is focused on corporate-commercial law, including corporate reorganizations, commercial contacts, business formations, and the purchase and sale of businesses. Vida received her Juris Doctor at Windsor Law in 2018. While studying law, Vida worked at the Community Legal Aid clinic, the Windsor Review of Legal and Social Issues Journal, and the Pro Bono Students Canada Program. Vida is a lawyer licensed to practice law by the Law Society of Ontario and is a member of the Ontario Bar Association and Canadian Bar Association.
© Kalfa Law 2021
The above provides information of a general nature only. This does not constitute legal advice. All transactions or circumstances vary, and specified legal advice is required to meet your particular needs. If you have a legal question you should consult with a lawyer.