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UNEXPECTED Vacant Home Tax Bill: 150,000 People in Toronto Received a Vacant Home Tax Bill

“Dan, I just received an $8,000 bill for vacant home tax!  What the heck is going on?”

“Did you file your vacant home tax declaration?”

“No, I did not.  This is my principal home!”

My friend called me in shock last week.

Soon after, I found out that my friend is only 1 of the 150,000 people who got an unexpected vacant home tax bill in their mailbox.

If you are a homeowner in the City of Toronto, self-use or rental investment, you have to continue watching because you could be affected by this widespread problem.

Share this video with friends who own a property in the city of Toronto.

Back in 2021, the government came up with the vacant home tax as an effort to tackle the housing crisis in the City of Toronto.

If you have an unoccupied property, you have to pay.

For any property that’s vacant for more than 6 months in a calendar year, the owner will get a vacant home tax bill at 1% of the assessed property value.

Let’s say your property has an assessment value of $1 million dollars, then you would have to pay a $10,000 vacant home tax if your property is considered vacant.

So how does the government know whether your property is vacant or not?

Every homeowner in the City of Toronto must file a vacant home tax declaration every year.

That’s every homeowner, every year.

Doesn’t matter whether it is your principal home or a rental property.

The vacant home tax was first rolled out in 2022 and we all had to file our declaration for 2022 by the end of February 2023.

When you received your property tax bill in 2023, there was an extra yellow page that said “Important Notice - Action Required”.

Do you remember seeing that yellow page?

That was the reminder to file your vacant home tax declaration.

Now that we are in 2024, we are just done filing our declaration for 2023 a couple months ago.

Recently 150,000 people received a vacant home tax bill because the government considered their homes vacant in 2023.

There are people who simply threw away that yellow page reminder in the property tax bill.

There are people who believe that they only need to file once and not every single year.

There are people who think that vacant home tax only applies to investment properties.

A lot of confusion.

But there are also people who got the bill even though they did file the declaration properly before the deadline.

Of course, people were shocked and angry.

There were long lineups at the city with people trying to complain.

Finally, the government admitted that many bills were sent by mistake.

What a big mess!

Imagine the amount of money the government now has to spend to deal with the aftermath.

The city has received over 85,000 complaints and appeals.

How many staff does the government need to add to handle all that?

We, the taxpayers, are paying for that.

And how much is the government actually making from collecting vacant home tax?

Here’s some interesting data.

In 2022, there were 2,336 homeowners who declared their properties vacant.

Then the government billed almost 45,000 properties because no declaration was made.

After complaints and appeals, the number went down to only around 17,000.

So in the end, the government collected the vacant home tax on less than 20,000 properties.

The average assessment value in the City of Toronto is roughly $700,000, so the average vacant home tax is roughly $7,000.

Multiply that by 20,000 properties, that’s roughly $140 million dollars of tax revenue.

How much of that was spent on the implementation and administration of the vacant home tax?

How much of that was spent on wrongly penalizing people and then cleaning up the mess afterwards?

Maybe that’s the reason why the government raised the vacant home tax from 1% to 3% this year, which will become payable next year in 2025.

Yes, the vacant home tax is now 3% in 2024.

In any case, if your property was not vacant for more than 6 months in a year, you don’t have to pay.

If you are in our rental management program, we file the declaration for you every year so you don’t have to worry about it at all.

Before we end this video, I want to share a very common question from landlords.

You completed occupancy closing of your brand new unit last year and you have been renting it out to a tenant.

But you didn’t complete the final closing until this year, then do you have to file the vacant home tax declaration for last year?

The answer is no because you are not the owner of the property during the occupancy period.  

The developer is still the owner, the ownership is not transferred over to you until final closing.

I hope this episode clarifies the confusion about the vacant home tax.  

If you have more questions, comment below and let me know.

If you found this episode interesting and educational, give me a like!  

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