Toronto brought in a vacant home tax. It’s in the amount of 1% of the assessed value of the property if the property was vacant for 6 months throughout the calendar year.
The tax starts 1 January 2023, however, it covers the 2022 calendar year.
Change of Ownership & the Vacant Home Tax
The Vacant Home Tax has implications for property transactions, both for purchasers and vendors:
- It is the responsibility of purchasers and vendors to make the appropriate arrangements to ensure that the declaration has been filed.
- The Vacant Home Tax will form a lien on the property, and any unpaid taxes will become the purchaser’s responsibility.
- If a closing occurs between January 1 and the closing of the declaration period on February 2, the vendor must complete the declaration prior to the closing, as only the vendor will know the property’s occupancy status for the prior year.
- If a closing occurs after the declaration period – February 3 to December 31 – the purchaser must submit a declaration in the following year. The purchaser qualifies for the “transfer of legal ownership” exemption.
- Vendors should provide a copy of the completed and filed property status declaration to the purchaser.
- Vendors should provide a statutory declaration at closing confirming the filed property status declaration is true and correct.
It is important to be aware of the status of the property, if you are a purchaser. The tax is a “municipal property tax”. It follows the property not the previous owner.
So, you might be acquiring a property in 2023 which was unoccupied for 6 months on a cumulative basis in 2022.
The property is assessed at $1 million. That means the tax will be 1% of that amount or $10,000.00. There might also be a fine for not declaring. That fine could be $10,000.00.
So, on a $1 million deal, the purchaser could be facing:
- $10,000.00 in taxes
- $10,000.00 in fines, and
- 1.25% compounded on the monthly unpaid balance
Apparently, this is the City’s approach to raise money for the homeless!
Brian Madigan LL.B., Broker