Staff at the City of Toronto are getting ready for a vacant home tax, but there’s some industry concerns. Toronto Regional Real Estate Board (TRREB) asked City council members to ensure “data-driven and results” based decisions. Along with this request, they also shared a list of exemptions they would like to see. Here’s a few of the exemptions they’re requesting from the City of Toronto.
Toronto’s Vacancy Tax
After years of denying Toronto’s vacant home problem, the city is planning on implementing a vacant home tax. The rate will start at 1% of the assessed value, with the full details targeted for release in Q2 2021. City staff is hoping to have it up and running by 2022. This puts Toronto just 5 years behind other global cities like Paris and Vancouver, that have implemented much steeper taxes. For example, Vancouver’s will be scaled up to 3% of assessed value by the time Toronto gets a vacancy tax.
Toronto’s Real Estate Board Requests A Laundry List of Exceptions
Toronto’s real estate board doesn’t quite agree vacant homes are the problem the city believes it is. TRREB “… is not opposed to a vacant home tax, and we understand the rationale behind it…”. However, it does have a list of exemptions they’re requesting be considered. Here’s a partial list they shared with us:
- Principal residences;
- Owners who are unable to rent the property due to market conditions;
- Snowbirds;
- U.S. citizens;
- Legal matters pertaining to court orders prohibiting occupancy;
- Commuters;
- Properties undergoing renovations or ownership changes during the calendar year;
- Owner or other occupier undergoing medical or supportive care; and
- If the owner is deceased and grant of probate or administration pending.
Some Exemption Requests Are Reasonable
Some of the requests are reasonable, and fairly obvious – like principal residence, and deceased owners. Typically a principal resident wouldn’t be subject to a vacant home tax, since they’re a resident for tax purposes. However, a non-resident for tax purposes, earning income free from local taxes, should probably be considered the proud owner of a vacant home.
Taxing dead people while their estate disposes of the property also seems like an obvious exemption, but isn’t quite so clear. Typically in real estate, dead people are pursued for damages. For example, the Province recently ordered a dead person to pay rent in arrears. The thought process is the dead person’s estate would be able to settle any damages to the landlord. What’s a reasonable time to dispose of property? It’s a little unfair to grant a homeowner longer than the half a year that would trigger a vacancy tax, when a dead person can be pursued for rent in arrears.
Some of The Exceptions Would Make A Vacancy Tax Pointless
Some of the exemptions are a little more odd, like commuters, US citizens, and snowbirds. The commute from the suburbs is a little rough, but not exactly an overnight thing. US citizens would be afforded more privilege than domestic citizens? Odd since that’s the largest demographic of foreign ownership in Canada. Snowbirds are typically still residents of Canada, with just the winter off. When they cease to be a resident of Canada by becoming a non-resident for tax purposes, should they still get an exemption?
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The elephant in the room that won’t be discussed is this tax is specifically to force people that don’t pay local income taxes to the economy, but benefit from corporate and income tax revenues.
When provincial and federal revenues are directed to municipal funding not covered by property taxes, taxpayers are subsidizing the living expenses of people wealthy enough to have two homes. Why should Americans get a free ride on our tax dollars?
Toronto voted to make the vacancy tax official. Hallelujah .
There is no “hallelujah” until I see a viable strategy to enforce this tax when it comes into effect in 2022 (nice gift to parasitic speculators to give them time to sell).
We need to tax anyone who own multiple real estate. All the speculators and hoarders need to pay.
That will drive rents up. As long as they’re renting the places out, they’re not taking any livable space off the market.
Oh the irony. TRREB talking about data driven decision making when they are the one who are controlling data, refusing to open sold data so buyers can be more informed. They can pound sand.
The vancany tax can’t come soon enough. Also, raise the property taxes next.
Hopefully we get a forward looking mayor, the Hidalgo of Toronto.
“TRREB talking about data driven decision making when they are the one who are controlling data…”
Exactly! UGH TRREB. Can we start calling the real estate industry what it is? A cartel.
Hidalgo has crushed the working middle class in Paris and built luxury social housing for people contribute nothing, paid for by the same working middle class she has crushed. People in Paris who don’t want to work now have nice, newer housing than people who DO work, all courtesy of taxpayers.
I know this will be a wasp nest, but what about taxing those private home owners who’s renting basements? Just see how many there is in Brampton for example.
There seems to be some appetite among progessives in the city council to do this, based on what I’ve seen in the committee meetings. But, you can definitely sense there is a reluctance to do this by many councillors. Deputy Mayor Minnan-Wong and Councillor Holyday are trying to turn the perception of this tax into it being some kind of cash grab, as if people having a home to live in isn’t as important as how much money an investor can make. These people, even at the 11th hour, still have no care or concern for the livability of this city nor its long term prosperity. Councillor Lai even went to bat for the foreign speculators in her comments on this law, and lobbied for TRREB being given a seat at the table when crafting this law, even though they are among the worst offenders in causing this housing crisis. Honestly, I don’t suspect that this will be done effectively because of this reluctance from a good chunk of city hall. A 1% tax is not enough, but some councillors like Minnan-Wong said they will vote No on the tax if it is anything over 1%. There will probably be loopholes built in, as well. I just feel like if they truly cared about this problem, they would have done this years ago. I guess we’ll see what happens…
What about people who buy a 2.2 million dollar home and have a declared income of 20k?
I am loving these characteristics of third world nations in Canada. I thought I left those things my country but Canada is just no different when it comes to politics, real estate cartels and transparency as compared to any third world nation.
In some respect its even worst, we have blind bidding, prices of sales are not displayed unlike in USA, supply is artificially constricted and salary rises 2% inflation rises 2% but home prices jump 30-40%.
I wish this blind bidding stops, government makes all price history of each property easily accessible, increase interest rates, give some limit on principal gains both in terms of number of times claim as well as amount to desist speculation so that poor man like me with good jobs can afford a house and live a decent life.
there are lots of ways to demotivate speculators if government so. I feel they opted for easy money no matter if working class comes to live in tents.
They just care for homeowners and not people who have to buy. Only help they seem to provide is take more mortage over ur capacity as if they will pay it lateron..
At end, story is same across world. Nobody cares for middle working class. Either u shud be rich to play game or poor to get something from government. Middle working class is destined to just work work from their tents or small rented apartment.
Praying this 30% price rise atleast stop so that i can work hard few more years afford this.
Hopefully the tax rate is set to at least 3%, like in Vancouver.
Let’s talk about mom and pop investors who are now sitting on vacant properties… thanks to a market glut. They are not uber wealthy.
No mention of ex-pats trying to maintain an toe-hold in their city and don’t want to rent their family home to careless renters. Being a landlord in Toronto is not for the feint-of-heart.
Remember: taxation works until you run out of other people’s money. Those ’speculators’ are supporting the city with property tax and employing people to maintain their properties. Tax them some more when they already don’t have a voice.
Vancouver is not a shining example. Their city council should go after Condo Stratas that insist there should be NO renters in their buildings. Now that is elitist and cuts in to available housing.
Let’s see if they truly do want to fix what is broken.
As much as people say there are supply side issues in housing, there is most certainly demand side problems that, up until now, have not been addressed. It doesn’t matter how many new units/homes you build if you have people from everywhere and anywhere buying up multiple properties as a means of growing their wealth instead of to house people. This problem includes both domestic and foreign investors. Affordable housing and the type of commodification of housing we have seen in Toronto and Vancouver can not coexist. You’ll reach the point where no one can live in your city because the incentives in the real estate market have been to do anything that is possible to have prices escalate year over year. Once that happens, you’ll have a city of empty homes that no one can afford to rent, let alone purchase. At that point, smart investors cash out of the casino and leave the city to clean up the aftermath. That is where Toronto is headed, with young people leaving the city due to its unaffordability. All this city will be left with is empty condo towers, retirees, house poor families, and not much else. A vacant homes tax is the least they can do to try and reverse course.
American ownership is known of because they list it, that doesn’t account for foreign ownership that is anonymous. That’s the more concerning of the 2 and shouldn’t be taxed, it should be made illegal.