If you own a property in the City of Toronto, you are affected by the Vacant Home Tax starting in 2022.
Actions will be required from you even though your property is not vacant in 2022, so make sure you stay till the end of this video.
I’m going to answer 4 major questions regarding this new tax. Let’s dive in.
Question #1 How Much is the Vacant Home Tax?
It is one percent of the Current Value Assessment of your property.
That’s the assessed value determined by the Municipal Property Assessment Corporation, which is typically lower than the market value.
Let’s say the assessed value of your property is one million dollars.
Then the vacant home tax will be one percent of that.
So if your home is vacant in 2022, then you will have to pay $10,000 vacant home tax by May 1, 2023.
Question #2 What is the Definition of a Vacant Property?
Your property is not considered vacant if one of the following 3 conditions are met.
The property is your principal residence and you live there for 6 months or more throughout the tax year.
You may only have one principal residence for a given year.
#2 Permitted Occupant
You own the property but you permit a family member or a friend to live there as their principal residence and they stay for 6 months or more.
This is different from renting to a tenant, which is coming up next.
You rent your property to a tenant with a written tenancy agreement and the lease term must be at least 30 days.
You can have one lease agreement or multiple lease agreements throughout the year but they must add up to at least 6 months.
And the tenants must be using the property as their principal residence.
Effectively, all the AirBnB units will be deemed vacant and subject to the vacant home tax because the minimum lease term must be 30 days.
You see, the government is trying to increase housing supply by pushing all the vacant and short term rental units to go back to the market as long term rentals.
Question #3 Are there Any Exemptions?
The property is undergoing repairs and renovations.
The property is sold to a different owner.
The owner has to work outside the GTA for more than 6 months, it has to be a requirement from a full time job.
The owner is in hospital or passed away during the year.
There’s a court order to leave the property vacant.
For situations like the above, the property may be left vacant and be exempt from the vacant home tax.
Now, the most important question.
Question #4 How does the City Know that Your Property is Vacant?
You have to declare the status of your property.
If you do not submit your declaration, the City would automatically deem your property vacant and bill you for the vacant home tax.
The deadline to declare your property’s 2022 occupancy status will be February 2, 2023.
You will have to submit the declaration through the City’s online portal.
The portal is not open yet, it is expected to open sometime this month.
If you are subscribed to our rental management program, you do not have to worry about this.
We will be submitting the declaration on your behalf before the deadline and you will receive a confirmation email from us once it’s done.
This declaration will have to be done once a year and we will take care of that for you.
The Vacant Home Tax currently only applies to properties in the City of Toronto.
If your property is in the York Region, you won’t need to declare your occupancy status.
I will be going through more housing policy changes coming along in 2023. If you’re not subscribed to this channel, make sure you do that now so you won’t miss out on important updates.