Will Toronto introduce a vacant home tax?

A new report calls for a vacant home tax in Toronto, aimed at raising the local housing supply.

The city’s chief financial officer and treasurer, as well as the executive director housing secretariat are recommending the new tax. In case it’s approved, it will take effect in 2022.

According to the report, the main goal of it is affecting homeowners to either occupy or rent out their properties for at least six months of the year, or pay a tax.

Mayor John Tory believes the new tax could motivate people not to leave homes vacant in the city.

“It’s the real purpose of the tax. It will improve housing affordability,” – Tory noted.

He says the vast majority of Toronto residents will not have to pay the tax, as there will be certain exeptions, including those who are out of a home because of the sickness, those who spend half a year in Florida or make renovations.

The city expects the costs for program introduction to reach $10-$13 million over two years.

Using the similar tax implemented in Vancouver, the city predicts a possible tax yield of $55-$66 million per year in Toronto.

Nevertheless, the report says there could be significant differences in the prevalence and reasons for properties’ vacancy in Toronto.

As you know, Vancouver introduced empty homes tax in 2018 amid a housing crisis and low vacancy rates. It was supposed to encourage owners of empty properties to put them onto the rental market.

Homeowners are taxed based on the assessed cost of the property which isn’t their principal residence or isn’t rented out for at least six months in a year.

CMHC says the tax combined with other market factors helped put 5,000 condos to the rental market last year, with 3,000 of them reported in downtown Vancouver.

According to the city of Vancouver, since the introduction, the tax has helped cut the number of empty properties in the city by 25%.

In case the report is approved, it will be presented to the city council at its meeting on Dec. 16 and 17.