There have been talks for quite some time about a vacant home tax and it’s official that the city council of Toronto has approved this tax and although more details won’t be coming out until further this year in 2021, we do know that this tax will be applied in 2022 and that it’s going to be modelled after a similar tax that has been implemented in the city Vancouver a few years ago.
So how does this Toronto Vacant home tax look so far?
- The Vancouver tax is 3% of the home’s taxable value, not occupied more than 6 months in the year would constitute a “vacant home”, up from the original 1.25%, this tax was accredited for creating more housing supply and additional revenue for the city of Vancouver and we can expect a similar structure here with the exception of it being slightly cheaper projected at 1%
- City officials here in Toronto estimate that a 1% levy of the homes taxable value would generate an annual income of $55-$66 million that would be used to fund affordable housing in the city.
- This is used to incentivize investors with vacant units to either fill them up or put them up for sale increasing the housing supply. According to a TRREB Report, 40% of condo investors said they planned to sell prior to this tax being implemented, 30% would have it rented out and 30% would continue owning and simply absorb the additional cost.
Although it’s highly unlikely to entirely correct the housing shortage & inventory level challenges that we’ve been facing as a city, this is a positive step in the right direction to help alleviate some of the burden and also face these challenges.