You may have heard the term “Vacant Home Tax” in the news over the past few years. As housing affordability continues to be a major topic across the city, the City of Toronto introduced this tax to encourage homeowners to keep properties occupied rather than sitting empty for long periods of time. For homeowners following the East Toronto real estate market, understanding how this tax works is important.
The Vacant Home Tax is part of Toronto’s broader effort to increase available housing and support affordability throughout the city. Whether you own a primary residence, an investment property, or are considering purchasing in the East Toronto real estate market, here’s what you should know.
How Much Is the Vacant Home Tax?
The City of Toronto introduced a tax on residential properties that remain vacant for most of the year. Originally set at one per cent of a property’s assessed value, the tax has since increased in recent years as the city continues to address housing supply concerns.
For example, a home assessed at $1,000,000 could face a significant annual tax if it is declared vacant.
When Did the Tax Come Into Effect?
The Vacant Home Tax officially came into effect in Toronto in 2022, with homeowners required to declare the occupancy status of their property annually.
Each year, homeowners must submit a declaration confirming whether their property is occupied or vacant. Failure to declare can also result in penalties and the property being deemed vacant by default.
Who Does the Vacant Home Tax Apply To?
Toronto homeowners are required to declare the status of their property every year. A property may be considered vacant if it is left unoccupied for more than six months during the previous calendar year.
However, there are several exemptions that may apply, including:
- Major renovations or redevelopment
- The death of the registered owner
- Medical care or long-term hospitalization
- Legal ownership transfers
- Certain rental restrictions
Importantly, the tax does not apply to a homeowner’s principal residence.
For buyers and investors in the East Toronto real estate market, this policy may influence decisions around secondary properties and investment opportunities.
Where Else Has This Tax Been Introduced?
Toronto is not the first city to introduce a vacant home tax. Vancouver implemented a similar Empty Homes Tax in 2017 as part of its affordability strategy. Since then, other major cities around the world have explored similar measures to discourage long-term vacancies and increase housing supply.
Cities including Melbourne and other global urban markets have also considered or implemented comparable taxes.
How Could This Impact Toronto Housing?
The City of Toronto estimates that the Vacant Home Tax could generate millions of dollars annually to support affordable housing initiatives. At the same time, the city hopes the tax will encourage owners to rent out unused properties rather than leaving them vacant.
For the East Toronto real estate market, this could potentially increase rental inventory and create more housing opportunities for residents. Some industry experts believe the policy may help improve supply over time, while others question whether the tax alone is enough to significantly change homeowner behaviour.
As Toronto’s housing market continues to evolve, policies like the Vacant Home Tax remain an important conversation for homeowners, buyers, and investors alike.
What Are Your Thoughts?
Do you think Toronto’s Vacant Home Tax will make a meaningful impact on housing affordability and inventory levels? As the East Toronto real estate market continues to shift, it will be interesting to see how homeowners and investors respond in the years ahead.
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