19 Jan What To Know About The New Vacant Home Tax
Are you a homeowner who has recently begun the process of real estate investing and currently have a vacancy in your property? Did you know that you may incur taxes on a vacant condo or home?
When a residential property (home or condo unit) is unoccupied or not being used as a primary residence it could be subject to a penalty, also known as a vacant home tax.
Depending on the value of your condo unit, that could be substantial. The current recommended vacant home tax rate is 1% of the property’s current value assessment.
This new tax has come into effect at the start of 2022 and there is an opportunity for homeowners to declare vacant owned properties to make sure are complying with regulations in the province.
Why Is The Vacant Home Tax Important?
This is a direct order to help keep the supply and demand of the housing market in Canada more on an even playing field and includes properties owned by both non-residents and non-Canadians as well.
Do you own a property that has been vacant for more than six months in the previous calendar year?
If that’s the case, you might be subjected to a vacant home tax of 1% of your home’s current market value.
Who does this help?
With more sitting vacancies penalized, this really focuses on giving renters more options and giving more opportunities for landlords to generate potentially passive income. With more people strongly encouraged to put their vacant secondary home on the market, it will encourage more supply in the market, potentially dropping the price of condo rentals in the city.
With the average home in Toronto costing over CAD 1 million, that would equate to paying $10,000 (or 1% of the home’s value) in vacant home tax once a year, as opposed to renting out the same place on DelRentals for a cashflow positive situation. Another thing to note is that if the home is vacant in 2022, the tax will become payable in 2023.
How to declare Vacant Home Tax
If you find that the secondary property you own has been unoccupied for more than six months, here is how to declare your vacant home tax.
Opened in mid-December 2022, the City of Toronto has designated an online portal for those who require the proper paperwork and declaration.
To declare your vacant home tax, you’ll need a 21-digit assessment roll number and customer number from your tax bill or property tax account statement. When declaring it, you will be required to submit information about your tenants.
If your property is penalized, then you will be given notice in March and April, and payment will be due on May 1st. If the homeowner fails to declare, then they might be fined between $250 and $10,000.
An Option If You Have A Vacant Condo Unit in The Greater Toronto Area
For DelRentals, we find investors come to us when they have sitting properties, do not have time to manage their own rental property, or can’t find the ideal tenant for their rental property in Toronto.
Do you have a vacant condo property that’s coming up on six straight months of vacancy? We can assist you with preparing your home for rental, finding the right tenant, and creating that passive income from a sitting property to help you potentially avoid penalties caused by this new bylaw.
Contact DelRentals today to assist you with setting up your condo rental.