Toronto could hike its vacant home tax as the housing crisis grows

Toronto councillors could hike the city's vacant home tax at its meeting this week a year after the new fee was introduced. 

In a new report, city staff have recommended the tax for having an empty house or condo be pushed from one to three per cent of it's assessed value next year. The proposal lines up with a promise Mayor Olivia Chow made during the spring byelection — one she says will not only help Toronto address its growing housing crisis but help trim its budget deficit too.

"It's important that in the middle of a housing crisis that we don't leave apartments or homes vacant," Chow said a day ahead of the start of the council session.

City council voted in December 2021 to create the tax on vacant properties. The goal was to put pressure on the owners to sell those empty homes or put them on the rental market. 

Anyone subject to the tax pays one per cent a year of a home's current assessed market value. 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."

Fines for attempting to evade the tax can range from $250 to $10,000. 

The city says that by the end of February, it had received approximately 95 per cent compliance as home owners either declared their home occupied or vacant. As of August 1, just over 2,160 homes were declared vacant. The city ultimately deemed a total of 17,400 vacant, meaning their owners had to pay the tax.

There are exemptions to the tax, including if the homeowner is in long-term care, if the property is undergoing repairs or renovations or if vacancy has been caused by the death of the owner.

City staff say that revenues from the first full year of the tax were $54 million, in range of projections made before it launched. Chow said she'd like to see that funding put into a dedicated stream. 

"We want to take that money to buy older buildings that we can protect, make them affordable for tenants forever and create affordable housing," she said.

The tax is also one of a number of measures recommended by city staff to help address a $1.5-billion budget deficit this year. Chow stressed the the levy is meant to crack down on real estate speculation that keeps homes off the market long-term. 

"I don't apologize for asking speculators ... to pay more," she said.

Coun. Stephen Holyday, who represents Ward 2 Etobicoke Centre, voted against the creation of the vacant home tax. Residents of his ward have expressed frustration with the fee and the complexity of the system to opt-out in order to avoid being charged, he said.

The city is still working its way through a backlog of thousands of homeowners appealing being assessed for the tax. He said the cost to administer the vacant home tax — which is approximately $11 million a year — cuts into the effectiveness of the levy.