Toronto is going to implement a tax on Vacant houses in the city. This tax has been planned to increase the affordability of the houses in Toronto. It is observed that the prices of real estate are continuously increasing even in the COVID-19 pandemic.
As the affordability crisis worsens in more Ontario regions, rising housing prices in the Toronto area and more modestly priced markets like Hamilton have put affordable housing out of reach for many. The City of Ottawa will begin taxing unoccupied residential units.
How Will it Be Done?
Developing the framework is the first step in the process; that’s why the city council has advised the city staff to develop one who will have all the details regarding the tax rate, collection, exemptions, and enforcement design.
The tax on vacant homes is very similar to the tax implemented previously in Vancouver in 2017. The tax was charged when the house was not occupied for six months.
The officials have estimated that the 1% of the housing in Toronto is vacant, and by implementing the tax on it, they could generate around C$55 million.
John Tory, Mayor John Tory, mentioned in one of the statements that many people would be reluctant to pay this tax, but it would benefit the whole city with more affordable housing.
When you live in Canada, you have to be sure that you know all the different taxes. You have to file an HST return for the obligations of CRA for goods and Services Tax.
Why is This Being Done?
This tax would motivate the owners of the houses to sell the residential houses which haven’t been used for a long time or sell them to those who need them the most. This tax on residential units would enable many people to get a good house for rent. The tax will be charged if they have left the house vacant for more than six months in a year.
Some people have said that they are born in this city but have to move to a different city because they cannot afford the high rent of the houses in Toronto.
The real estate agent is involved in a scheme called “Land banking,” which means that they purchase the property and leave it for the prices to rise and then sell it at a higher price. They treat the property as a stock and hold it for a period until its price rises. The exact number of the houses which are vacant in the city is still unknown.
The government is trying to help the people who cannot afford the rent of a house by encouraging the owners of the house to either sell it out or rent it but not to keep it vacant for a long time.
This vacant home tax would be implemented in 2022. Now, the development and planning if this tax is going on. The real estate mafia who treated properties as stock will be out of the game very soon.
If you have questions regarding the Toronto vacant home tax, contact us to discuss any possible impending tax concerns.
Sohail Afzal, CPA, CMA, MBA
Sohail Afzal, (CPA, CMA, MBA) is the founder & CEO of GTA Accounting Professional Corporation. He is a highly experienced Chartered Professional Accountant and businessman himself and understands the challenges that many businesses face when it comes to cash flow management. As an experienced business consultant & tax advisor, he is helping companies grow by providing the technical, financial, and contractual information necessary for strategic decision-making.