Chow calls for overhaul of Toronto's vacant home tax

A showdown over the future of the Toronto's vacant home tax appears set for city council next week, with Mayor Olivia Chow saying the levy needs a complete overhaul, while some city councillors are moving to kill it altogether.

Chow said the administration of the tax this year has been fraught with confusion and has caused anxiety for tens of thousands of homeowners. She's vowing to make fundamental changes, while still defending the levy designed to help address the city's housing crisis.

"We're cleaning up this mess," she said. "It's scary getting a bill that says, all of a sudden, I have to find $5,000 in a couple of weeks. It's unfair. It caused hardship."

The tax targets homeowners who choose to keep their residential properties vacant. The city has said the measure is meant to increase the supply of housing by discouraging homeowners from leaving residential properties unoccupied.

A new report from city staff released Friday says about 167,000 homes in Toronto were deemed vacant after the extended period to make a declaration ended on March 15. That meant just over 20 per cent of all residential properties in the city — approximately 813,000 — were deemed vacant.

That was a dramatic year-over-year increase. In 2023, just 11,000 — or just over one per cent of those same homes — were deemed to be vacant following the process. 

Failing to file before the deadline meant a fine of $21, which has now been waived.

Some homeowners say they forgot to file before the deadline, while others say they filled out the declaration in time and were billed by the city anyway.

By mid-day Friday, the city says it had reversed approximately 108,000 charges. It will now cross reference last year's list of vacant homes with this year's list to automatically opt-out an estimated 48,000 additional properties it believes are occupied.

Anyone subject to the tax currently pays one per cent a year of a home's current assessed market value, a potential bill for thousands of dollars. That fee applies if a home has been unoccupied for six months in a year or is not used as the owner's principal residence or by "permitted occupants."

Chow said city hall is to blame for the billing mess and is moving to fix it. She confirmed the situation has led the city to fire at least one civil servant. 

"The program was designed in a way that is deeply flawed," she said. "That person is no longer working for the city. The communication has failed … And it doesn't matter at this point whose fault it is. It's the city's fault. "

Last week, Chow and budget chief Shelley Carroll said the city will waive the late fee for not declaring a status on time.

They're now asking city staff to conduct a full review of the problems this year, with an eye to improving the system next year, when the tax increases from one to three per cent. That could include using utility data, like water and hydro usage, to determine if a home is vacant instead of the owner opt-out.