Are you wondering how Toronto’s new Vacant Home Tax could affect your downtown condo plans this year? You are not alone. If you own an investment unit or you are weighing a sale, the new 3% levy changes the math on carrying an empty property. In this guide, you will learn how the tax works, what to file, how it may shift condo supply, and how to time a rental or listing to stay compliant and protect your returns. Let’s dive in.
What the Vacant Home Tax is
The Vacant Home Tax (VHT) aims to bring underused homes back into the market. The City wants more units either rented or sold, which can increase available supply. The policy applies to residential properties inside the City of Toronto, including condos.
Who must declare
Every property owner must submit an annual occupancy declaration to the City stating how the home was used in the prior calendar year. If the property is your principal residence, you generally claim an exemption. Investor-owned units that sit empty with no qualifying exemption are the main focus of the tax.
How the 3% levy works
Starting with the 2024 tax year, properties deemed vacant are subject to a tax equal to 3% of the property’s assessed value. The City uses MPAC’s assessed value to calculate municipal property taxes, and the VHT is a percentage of that number. For example, if a condo’s assessed value is $800,000, a vacancy would create an illustrative VHT of 0.03 × $800,000 = $24,000 for that tax year.
What counts as vacant
Vacancy definitions and exemptions are set by the City and can include principal residence, long-term tenancy, and certain permitted absences. Rules for properties under renovation and short-term rentals are specific and can change. Review the official guidance and current declaration form on the City’s Vacant Home Tax page to confirm how your situation is classified and to see deadlines and exemptions.
- Visit the City’s guidance: City of Toronto Vacant Home Tax program page
Filing, proof and penalties
Annual declaration and deadlines
You need to submit a truthful occupancy declaration each year for the previous calendar year. Deadlines and procedures are set by the City and may change. Check the City’s Vacant Home Tax page for the current filing window, late-filing process, and any updates to the rules.
What to keep on file
Maintain clear records to support your declaration. Helpful documents include:
- Lease agreements and rent receipts with tenant names and dates
- Utility bills or internet statements showing occupancy periods
- Listing records and closing statements if you sold or listed
- Travel or medical documentation for permitted absences
- Short-term rental booking records and platform payouts, if applicable
Audits and consequences
The City can audit declarations and ask for documents. False or missing declarations can trigger back taxes, fines, and interest. The 3% levy is in addition to your regular property taxes, condo fees, maintenance, insurance, and any mortgage interest, so an unexpected vacancy can be costly. Using the earlier example, a unit assessed at $800,000 could face a $24,000 VHT bill if classified as vacant for the tax year.
How this shapes condo supply
Short-term effects downtown
By raising the cost of leaving a unit empty, the VHT nudges owners to either rent or sell. In the near term, you can expect more rental listings as previously empty condos come to market. Some owners will also list for sale to avoid future vacancy exposure.
Medium-term outlook
Over one to three years, more available rental units can slow rent growth, especially among smaller downtown units that investors commonly own. On the for-sale side, added condo listings can soften price appreciation unless demand rises to match.
What may limit the impact
Exemptions reduce how many units are taxed. Enforcement and audits influence how strongly owners respond. Broader market forces, including population growth and job trends, can absorb added supply. Vancouver’s Empty Homes Tax provides a useful comparison, where reported increases in occupied dwellings followed implementation, though exact magnitudes vary by study and neighborhood context. See the precedent here: City of Vancouver Empty Homes Tax overview.
Owners: rent or sell?
Run a cash-flow check
Start with a simple model and current market data:
- Estimate annual gross rent for your unit type and location.
- Subtract operating costs: condo fees, property taxes, insurance, repairs, vacancy allowance, and management fees.
- Add potential VHT exposure if the unit might be vacant: probability of vacancy × 3% of assessed value.
- Compare the resulting net rental yield to your expectations for price growth minus selling costs and taxes.
A quick worksheet you can use:
- Potential VHT: Assessed value × 3%
- Net rental income: Expected annual rent − operating costs
- Compare: Net rental income vs. likely after-tax sale proceeds over your time horizon
Non-financial factors
Your time horizon matters. If you are a long-term holder, stable rental income may be attractive. If you want liquidity or prefer to avoid regulatory risk, a sale could be simpler. Consider your risk tolerance and how hands-on you want to be with leasing and management.
Timing and compliance strategies
Avoid unnecessary VHT liability
- If you plan to be vacant for only a short period, make sure lease start or end dates clearly show occupancy within the calendar year. Check the City’s vacancy threshold definition on the declaration.
- If renting, use signed long-term leases and issue receipts. Keep all records in one file.
- If selling, understand how mid-year sales are treated. A sale may not erase liability for a period when the unit was otherwise vacant. Confirm details on the City’s page and retain MLS and closing documents.
- Never use sham leases or misstatements. False declarations risk penalties and reputational harm.
Legitimate timing moves
- Rent or list before year-end if doing so changes your status for that tax year. Confirm whether partial-year occupancy counts as occupied under current rules.
- Use short-term rentals only if they qualify as occupancy and if you have proper licensing. The City’s short-term rental rules are separate and specific, so confirm details before you proceed.
- If you plan major renovations, check if an exemption could apply for that period and document the work.
Admin checklist for owners
- Register and note the City’s declaration deadline on your calendar.
- Gather leases, receipts, utility bills, and any exemption documents.
- Ask a real estate professional for current rental and sale comparables to ground your model.
- Consult your accountant on after-tax returns and any capital gains considerations.
- When in doubt, file a declaration and provide evidence rather than miss the deadline.
Data to watch
You can track how supply evolves by watching key reports. For rental trends and vacancy rates, see the CMHC Rental Market Reports hub. For condo listings, absorption, and pricing, consult Toronto Regional Real Estate Board market updates. The City is also expected to publish VHT monitoring data over time on the program page.
What this means for you
The VHT makes carrying an empty condo more expensive, which rewards timely, well-documented decisions. If you rent, focus on clean records and a solid lease. If you sell, plan your listing date, disclosures, and closing around the calendar year and your goals. If you need help weighing scenarios, you deserve clear, data-backed advice from someone who knows building-level dynamics and how buyers respond.
If you want a personalized rent-or-sell strategy for your unit, along with current comps and a filing timeline that keeps you compliant, reach out to Amanda Beecham. Let’s Connect.
FAQs
What is Toronto’s Vacant Home Tax rate?
- The VHT is 3% of a property’s assessed value for the applicable tax year when the property is deemed vacant under City rules.
How is the VHT calculated for condos?
- The City uses your MPAC assessed value and applies 3%. For example, a condo assessed at $800,000 would face an illustrative $24,000 VHT if vacant for the tax year.
Do Airbnb stays count as occupancy under VHT?
- Short-term rental treatment is specific. Confirm on the City’s Vacant Home Tax page whether such stays qualify and ensure you meet separate short-term rental licensing rules.
If I sell mid-year, can I avoid the tax?
- A sale does not necessarily eliminate liability for prior vacant periods in that calendar year. Review current guidance and keep listing and closing documents to support your declaration.
What documents should I keep for a VHT audit?
- Keep leases, rent receipts, utility bills, travel or medical records for permitted absences, and any short-term rental records. Good documentation supports your declaration.
