Toronto’s New Vacant Housing Tax Still Happening

The New City of Toronto Vacant housing tax is now in effect in Toronto residences. Subject to certain exemptions, the tax applies to dwellings if they are unoccupied for more than six months during the preceding calendar year.

Unless current exemptions are clarified, many unsuspecting homeowners will be hit by the 1% annual tax.

Most large apartment buildings and condominiums, for example, have a living unit used as a property management office. These units will be taxable unless they do not have a kitchen.

Another exemption for houses, condos and apartments under construction or renovation requires a certificate from the head of the building department attesting that the work is carried out without unnecessary delay. This certificate must be obtained before filing the declaration of vacancy. How quickly this certificate can be made available is a matter of debate.

On the city’s website at press time, exempt rental property was defined as property occupied for residential purposes under a written rental agreement for at least 30 days. There’s no explanation of how to deal with the thousands of units in Toronto that don’t have a written lease.

This definition also seems to encompass short-term rentals, like Airbnb, which can be occupied most of the year but with leases of less than 30 days. They may also be subject to vacancy tax.

Under the regulations, the property where a resident lives and carries out day-to-day activities is considered a principal residence. But the city says a person can only have one primary residence.

Snowbirds, students and other people studying or traveling abroad for long periods of time will not be subject to tax on their principal residence.

But home offices and separate residential studios for musicians or artists will be taxable if they have a kitchen. Units that are zoned residential but are not the owner’s primary residence will be subject to the tax.

A one-star reader wrote to me to say that he has lived in his Toronto home for over 30 years, but is the sole caregiver for his elderly parents who live elsewhere. He cannot afford to pay other people to look after his parents and has to spend more than six months a year caring for them in their own home.

It looks like the reader’s unit will be exempt from the vacancy tax, despite being away for an extended period. But the exemption appears to defeat the intent of the very limited exemption for vacant units where the primary resident is in a hospital or long-term care facility for up to six months during the year. They are exempt.

Yet when a resident is in long-term care for more than six months, it appears that their home will be subject to the tax.

In response to a long list of questions I sent to the City of Toronto’s Media Relations Department last week, Casey Brendon, the city’s director of tax services, said, “The housing tax vacant cannot compel a landlord to sell or rent his dwelling.”

I have my doubts.

The regulation is still under construction. If you have any questions, call 311 or your local councillor.

Bob Aaron is a Toronto real estate lawyer and contributing columnist for the Star. He can be reached at [email protected] or on Twitter: @bobaaron2


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