Mayor's executive committee approves 1% vacant home tax

torontosun.com
July 7, 2021
Jane Stevenson

A vacant home tax in Toronto has gotten the go-ahead from Mayor John Tory’s executive committee.

City Council still has to consider the tax next week, but if approved, the new levy on vacant Toronto homes would start in January 2022.

The tax would become payable for the first time in early 2023, based on the occupancy status during the previous year.

A home is considered vacant if it has been unoccupied for more than six months, but there are exemptions, including the death of the owner, the homeowner is under medical care, or the home is undergoing renovation.

The idea is to encourage vacant home homeowners to sell or rent out the homes in order to increase the housing supply.

The initial tax rate being proposed is 1% of the property’s current value assessment (CVA) for the year in which the home is vacant.

But Emily Johnson, the lone speaker to the executive committee on Tuesday, said a tax of at least 3% would be preferable.

“Housing prices, like Toronto is currently suffering through, is not the time to feature (a tax) we know is going to be ineffectual,” said Johnson, who said she’s fully employed but pays more than she can afford in a rent-controlled apartment in the city.

“Introducing a tax at an ineffectually low rate is to cut its potential benefits in half. Toronto is very lucky to have the example of Vancouver to go by,” she said. “Their vacant home tax was introduced at 1% in 2018 and (was) very limited improvement in terms of convincing owners and properties to rent them out. They finally increased the tax to 3% this past September (and it has) finally begun to put a more significant number of rentals back on the market.”

Toronto Chief Financial Officer Heather Taylor countered Vancouver actually experienced a 25% decline in vacant houses after the first year of its vacant tax.

The number of vacant homes in Toronto is unknown but using Vancouver’s tax metrics --assuming 1% of Toronto’s housing stock is vacant and with a tax rate of 1% on the average Toronto home’s current assessed value -- the levy could yield between $55 million $66 million annually.