Toronto’s new 1% Vacant Property Tax has generated significant confusion and concern amongst homeowners and real estate investors. In this blog post, we will discuss the three key things you need to know about this tax and what it means for Toronto property owners.
- The Purpose of the Tax
- Filing Requirements and Penalties
- Protection for Buyers
The primary reason for the implementation of the 1% Vacant Property Tax is to address the housing shortage in Toronto. The City of Toronto wants to ensure that all residential properties are being used as primary residences by homeowners or renters. Vacant properties contribute to the housing shortage, and this tax is intended to discourage such behaviour.
Property owners in Toronto are required to file a declaration with the City of Toronto by February 28, 2023, indicating whether they personally occupy the property or have had a family member or tenant occupying the property for at least 6 months in 2022. Failure to file the declaration on time may result in a penalty of $250.
The tax is calculated based on the last municipal assessment received, and property owners who falsely declare their property as occupied may face additional penalties and interest charges. Exemptions are available for certain situations such as property renovations, owner death, or recent property purchases.
Property buyers who purchase a property in 2023 may receive a bill for the 1% Vacant Property Tax if the seller did not file the required declaration or submitted false information. However, real estate agents and lawyers can protect buyers at closing, and buyers can obtain title insurance to provide additional protection should a tax bill be levied after closing.
Conclusion
In summary, the 1% Vacant Property Tax is a new tax implemented in Toronto to address the housing shortage. Property owners in Toronto must file a declaration with the City of Toronto by February 28, 2023, indicating whether their property was occupied for at least 6 months in 2022. Failure to do so may result in a penalty of $250. Property buyers in 2023 can obtain protection through real estate agents, lawyers, and title insurance. By understanding the filing requirements and exemptions, property owners can avoid penalties and unexpected tax bills.