Toronto’s vacant home tax. What if I miss the declaration deadline?

Toronto's vacant home tax.  What if I miss the declaration deadline?

In January 2023, the City of Toronto is introducing a vacant home tax in order, The City of Toronto vacant home tax is meant to discourage owners from leaving their residential properties unoccupied.  Those who do will face a hefty tax bill on top of their existing property taxes.

Toronto's vacant home tax.  What if I miss the declaration deadline?

If you live or own a property in the City of Toronto, you’ll likely receive a letter from the city informing you that you must complete an online declaration for your property.  All owners of residential property in the City of Toronto must file an online declaration of the occupancy status of their property before February 2, 2023.

What if my vacant home tax declaration is not filled out by the deadline?

According to the City of Toronto’swebsite, If your property status declaration is not made by the declaration deadline of February 2, 2023, a fine of $250 will be issued.

Further, failure to make a declaration will result in your property being deemed, or essentially assumed as vacant.  Once deemed vacant, your property will be subject to the tax and you will be issued a Vacancy Tax Notice.

Further, if you are looking to sell your property, you will also likely face issues on closing if you do not have a completed declaration.  More on that below.

What if I submit my declaration past the February 2, 2023 deadline?

According to the City of Toronto, you will have an opportunity to submit a late declaration and based on your response, you may receive a supplementary Vacant Home Tax Notice.

How much is the Toronto vacant home tax?

The vacant home tax is set at 1% of the assessed value of the property.  So for example, if you have a property that’s assessed at $1M, you’ll be looking at $10,000 in annual taxes, in addition to your current property taxes.

If I purchase a property in the City of Toronto that was previously vacant, can I be held liable for the vacant home tax?

If a residential unit was vacant in the year prior to a sale, or if a seller did not file the city’s required property status declaration, purchasers could be on the hook for the vacant home tax, which will be added to the tax account.  If you are purchasing or selling a property in the city of Toronto in 2023 and beyond, the due diligence to ensure you don’t inherit someone else’s tax liabilities will become part of the closing process.

For purchases closing from January 1, 2023, to the declaration deadline of February 2nd, 2023, the seller (vendor) must file the Toronto vacant home tax declaration for the prior year prior to closing and provide proof to the buyer’s lawyer to confirm that the property was not vacant.  If the property was indeed vacant in the prior year, the purchaser’s lawyer will require a declaration from the seller, indicating that the property was vacant and that all vacant home taxes have been paid in full.

For purchases closing after the declaration deadline of February 2, 2023, the purchaser’s lawyer will either:

  1. Obtain a tax certificate to determine if the vacant home/unit tax was levied and paid; or
  2. Obtain the last required declaration filed by the sellers to confirm the property was not declared vacant in the last year the vendor was liable to pay taxes or obtain a declaration from the seller confirming that the vendor filed a vacant home/unit tax declaration the prior year declaring that the property was not vacant and that no vacant home/unit tax was levied 
  3. OR a declaration indicating that the property was vacant and all vacant home/unit taxes have been paid in full

The bottom line

Filling out the Toronto vacant home tax declaration by the February 2nd, 2023 deadline is an essential step for every residential property owner in the city of Toronto.  Not filling out the declaration can not only result in a fine or the city assuming that your property is vacant, but can also become an issue when you sell your property.

Important note: This article is not Legal Advice. No one should act, or refrain from acting, based solely upon the materials provided on this website, any hypertext links or other general information without first seeking appropriate legal or other professional advice.

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