TORONTO -- People with a vacant home in Toronto could be hit with a new tax designed to help cool the housing market.

On Tuesday, city council's executive committee approved a tax design and implementation plan on vacant Toronto homes starting in 2022.

"The goal of the tax is to change the behaviours of vacant home homeowners, encouraging them to sell or rent out the homes, thereby increasing the housing supply," the city said in a news release.

If approved by city council, a bylaw supporting the tax would come into effect on January 1, 2022, and that date would also become the start of the first tax reference year.

According to the city, the initial tax rate being recommended is one per cent of the property's current value assessment (CVA) for the year in which the home is vacant.

The city said they don’t know how many homes in Toronto are currently vacant, but using Vancouver’s tax metrics, the new law could bring in $55 to $66 million per year.

For sale

The tax reference year is the year that determines whether the tax is payable, the city says. The tax would become payable for the first time in early 2023, based on the occupancy status during the prior reference year.

The city said a home is considered vacant if it has been unoccupied for more than six months during the previous calendar year. 

Some exemptions to this include death of the owner, the homeowner is under medical care, or the home is undergoing renovation.

As part of the tax design, property owners will be required to declare the status of their residential home each year.

Certain properties may be selected for audit on a random or specific criteria basis, the city says.

If approved, a final report and bylaw will be prepared for council’s review by the end of 2021.

"A vacant home tax will result in a much needed increase to Toronto's housing supply, so I’m happy to see it approved today," Mayor John Tory said in a news release. "We simply can't afford to have housing for thousands of homes sitting empty."