Buying a house is expensive enough, but add in the layers of taxes for homeowners and it’s even more daunting. With yet another home tax proposed, homeowners everywhere are holding their breath, waiting to see what it will entail. Don’t worry, it’s not what you may be thinking. Unless you’re an investor with an empty home or condo, this proposed home tax means absolutely nothing for you.
Toronto City Council is proposing a Vacant Home Tax, to be implemented at the start of 2022, as a way to ease Toronto’s affordability crisis. If you’re a home owner, you would be responsible to submit a declaration each year that your home is in fact occupied.
The Reasoning Behind the New Tax
Councillor Ana Bailao claims that this tax isn’t a revenue generating tax but more of a way to turn these vacant properties into someones home.
This isn’t going to drop the price of homes or condos, but it will create more inventory for the large percentage of first time buyers, individuals securing housing for school and new-comers looking to put roots down who are feeling the pressure of pent up demand and low level inventory.
Now, the proposed tax rate will be around 1% of the “assessed” value of the property.
For example: If a condo is assessed at $650,000 the homeowner would be subject to $6,500 worth of taxes at the beginning of the year.
These homes are only considered vacant if they’ve been sitting unoccupied by the resident-owner, immediate family member or tenant for more than 6-months out of the year. There are some property exemptions such as: when the owner dies, if the owner is receiving care elsewhere, or if the property is undergoing renovation.
Snowbirds would also not be held liable for paying this tax, as long as they hold Toronto as their principal residence.
Following The West Coast
Toronto City Council plans on structuring this new tax similarly to Vancouver’s “Empty Homes Tax”.
While the amount of vacant properties in Toronto is currently unknown, the city believes this tax can garner upwards of $66,000,000 each year. These numbers are based off of Vancouver statistics.
Is The Vacant Home Tax The Answer?
While this tax will benefit those looking to secure a house or condo to rent, as I said before, it won’t drop prices for buyers. It is a viable option to help increase housing however. As long as the City of Toronto doesn’t use this tax as a new source of revenue, but rather as a deterrent for holding empty properties.
Feature Image: Nuno Job, Flickr