Toronto City Council approves hike in vacant home tax amid scarcity of housing
Toronto City Council voted Wednesday to increase the vacant home tax from one per cent to three per cent as the city tries to tackle the housing crisis.
“The housing costs are so incredibly high, which is why housing is the first item in front of City Council today,” Mayor Olivia Chow told reporters ahead of the council meeting Wednesday. “We’re asking speculators that are leaving units, apartment units empty in the middle of a housing crisis to pay a bit more so we could raise millions and millions of dollars.
- Download our app to get local alerts on your device
- Get the latest local updates right to your inbox
“And we're going to put that in a program to buy city buildings. These might be older buildings, they are affordable buildings. We want to protect these buildings so that we could make them available for people to make sure the renters have affordable homes forever.”
A motion from Chow to pass any additional revenue generated from the 2023 Vacant Home Tax to the Multi-Unit Residential Acquisition (MURA) program passed 23-1.
The MURA program is designed to preserve the existing supply of affordable rental housing in the city by having the city purchase market rental buildings in danger of being converted to condos.
The vacant home tax requires residential property owners in Toronto to make a yearly declaration about whether their property was vacant or occupied each year. It requires that homeowners pay a one per cent tax on the assessed value of their property if it was vacant for six months or longer.
The tax was adopted in 2021 and came into effect last year. Council asked staff to report back by the end of 2023 with findings from the first full year of tax collection and make recommendations for any changes.
For 2022, there were 2,336 property owners who declared their residential units vacant, while 44,902 other properties were deemed vacant by the city because no declaration was made. Late declarations received through a complaints process by August reduced the number of homes deemed vacant to 17,437.
Ultimately the city collected $54 million through the tax in its first year of implementation.
In the report to council on their findings, staff are recommending that the tax be boosted to three per cent of a property’s assessed value starting for the 2024 taxation year. The move would generate around $50 million more for the city, staff estimate, assuming that the number of vacant homes stays around the same. However, they point out that they expect the extra revenue to decrease each year as the program starts to deter people from leaving homes empty.
“The assumption is that this additional $50 million in revenue will decrease by approximately 20 per cent annually in subsequent years as a result of the Program’s target outcomes in improving housing supply and reducing the number of deemed vacant units,” the report says. “It is also expected that the incremental revenues as a result of a higher VHT rate starting with the 2024 taxation year will lessen over time as the objective of reducing the number of vacant residential units is achieved.”
Staff say the increase will help further discourage property owners for keeping units unoccupied, and will help offset the cost of the program.
Staff are also recommending a new fee of $21.24, to be adjusted annually for inflation, for failing to provide a declaration of occupancy by the yearly deadline. The move would bring in about $800,000, which they say would help offset costs of running the program. Revenue from that fee will also decrease as owners become more compliant with reporting, staff point out. Reporting compliance for the first year of the program was 95 per cent and staff estimate that will improve by one percent each year.
A person walks by a row of houses in Toronto on Tuesday July 12, 2022. THE CANADIAN PRESS/Cole Burston
Executive committee considered expanding the program to include multiunit residential buildings at a meeting on August 24. They contemplated including properties with two to six units in the program. However staff determined that it would be difficult for the city to make that move without expending excessive time and resources to assess the value of each individual unit. Staff are therefore not recommending the move at this time. Owners of multi-unit properties with two to six units can continue declare a property occupied for the purposes of the tax if at least one rental unit is occupied for a period of 183 days or longer.
Other changes being recommended include an exemption of up to two years for newly constructed, never occupied and unsold residential housing units, as well as an expanded definition of tenant to include business tenants.
Speaking at council Wednesday, Coun. Stephen Holyday said he opposes the increase and worries that it will become a revenue tool rather than a policy tool.
“I do not like this tax,” Holyday said.
He said he would like the ultimate goal of the tax to be for the city to collect no money rather than to become reliant on it for revenue.
He said he also wants to see an exemption for people who leave homes vacant due to health circumstances, relating a story about one woman in his ward who was hit with the tax after selling a condo she moved out of while she was having cancer treatments. Council passed a motion moved by Holyday to study the feasibility of exemptions for medical reasons.
Council also passed a motion moved by Holyday to affirm that the ultimate goal of the Vacant Homes Tax is to collect zero dollars.
Efforts to try and decrease the number of homes left vacant come as the city deals with a housing crisis that has seen rent prices skyrocket and home ownership made less affordable by higher interest rates.
CTVNews.ca Top Stories
'I screamed in shock and horror': Family faces deadly Vancouver hit-and-run driver during sentencing
The sentencing of the man who pleaded guilty in the deadly hit-and-run in Kitsilano two years ago began on Friday.
Keanu Reeves spins out at Indianapolis Motor Speedway in pro auto racing debut
Hollywood star Keanu Reeves made his professional auto racing debut on Saturday in an event in which 'The Matrix' star spun out at famed Indianapolis Motor Speedway.
Video shows person break into Old Montreal building before fatal fire that killed mother, daughter
The two people who died in a major fire in Old Montreal on Friday were a mother and her seven-year-old daughter, sources told Noovo Info.
This Ottawa photo radar camera issued 200 tickets a day over the summer
New data shows the automated speed enforcement camera on King Edward Avenue, between Bolton Street and St. Patrick Street, issued 6,337 speeding tickets in August, the highest number of tickets issued by Ottawa's 40 photo radar cameras.
Frequent drinking of fizzy beverages and fruit juice are linked to an increased risk of stroke: research
New data raises questions about the drinks people consume and the potential risks associated with them, according to researchers at Galway University in Ireland, in partnership with Hamilton’s McMaster University.
Storm brewing in Gulf of Mexico could intensify into a hurricane, threatening Florida
A storm system brewing in the Gulf of Mexico is expected to reach tropical storm status later Saturday, with forecasters warning it could intensify into a hurricane headed to Florida next week.
America votes: How the election could impact the Canada-U.S. border
While America's southern border remains a hot button issue on the campaign trail, the result of the U.S. election in November could also impact the northern frontier with Canada, which remains the longest undefended border in the world.
Montreal business hit with Molotov cocktail 2 nights in a row: police
Montreal police say a business in the city's Pointe-Saint-Charles neighbourhood was hit with Molotov cocktails two nights in a row.
OPP charge driver going 175 km/h on Highway 417 in Ottawa
Ontario Provincial Police have laid stunt charges against a driver caught speeding 75 km/h over the speed limit on Highway 417 in Ottawa's west end.