Toronto

Toronto Will Finally Get A Vacant Home Tax, After Bleeding Millennials For Years

Toronto may finally start taxing vacant homes. City of Toronto staff recommended a vacant home tax to council this week. The tax would place a penalty on those that use residential property in the City for less than half the year. By doing so, the City hopes to join other major cities like Paris in curbing housing speculation. This comes after Toronto has been bleeding millennials for years, as housing affordability reaches crisis levels.

Toronto’s Vacant Home Problem Is Forcing Millennials Out 

Toronto is becoming a place to park money in real estate, as young adults abandon the City. We pointed out in 2017, much to denial of the City, that tens of thousands of homes were vacant or scarcely used. Shortly after, the City’s own report found over 10,000 units were almost never used. This has made a sharp contribution to the City’s affordability crisis.

The affordability crisis has actually resulted in a negative flow of young adults. These key consumers to urban areas, tend to drive many of the creative and hospitality industries that make cities livable. As Toronto bleeds them to smaller regions and the suburbs, it sets itself up for long-term damage. This trend is likely to have accelerated during the pandemic, as Toronto’s suburbs became buying hot spots.

Toronto Net Intraprovincial Migration

More people are leaving Toronto for other (cheaper) parts of Ontario.

Source: Statistics Canada, Better Dwelling.

Toronto’s Vacant Home Tax Proposed At 1%

City staff officially recommended Toronto adopt a vacant home tax. The tax would start at 1% of the assessed value of homes used less than six months per year. The proposed starting rate would be almost double the rate of the city’s 0.599704% property tax rate. It’s likely to sting speculators sitting on vacant property, but not eliminate them. Vancouver recently raised its vacant home tax to 3%, to try and encourage a further reduction. The idea is to provide a penalty large enough to make vacant speculation unprofitable. 

Toronto Targets Vacant Home Taxes For 2022

The City is giving speculators plenty of time to liquidate, which will reduce the number of vacant homes by implementation. By the end of Q2 2021, the City should have the framework designed and ready to go. They’re proposing a target roll out for the 2022 tax year. The report estimates one percent of housing stock subject to the tax, would generate between $55 and $66 million in gross tax revenue annually. Yes, one percent of housing stock – more than rental vacancy in some years.

Toronto’s vacant homeowners will have more than enough time to liquidate, and avoid being hit with the tax. Just by existing, this is likely to promote a more efficient use of housing supply. This should help ease demand over the next couple of years. Although whether it’s too late to reverse the outflow remains to be seen. Millennials still have to pick between the vacant tiny boxes the City built for AirBnB, or spacious suburbs to work their now remote jobs. 

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9 Comments

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  • Reply
    Ian 2 months ago

    3 years late, but better than never. Now to make sure they give everyone enough time so the true extent of the problem is never known.

    • Reply
      Steve 2 months ago

      Match Vancouver and go straight to 3% it’s crazy not to… then match NZ and only allow citizens/residents to buy property.

      While we currently don’t have enough housing for locals, why should we be a parking spot for global money? There are too many members of government, that are far too cozy with real estate developers.

      • Reply
        Pepp 2 months ago

        Please organize a protest for this, I mean it. I will join.

      • Reply
        Scott 2 months ago

        Good idea but it would never fly especially with the the Ontario Developers Association in charge of the government. They want to keep building safety deposit boxes. Wouldn’t be surprised if it hey vetoed Toronto’s vacancy tax…

  • Reply
    question guy 2 months ago

    This is RIDICULOUS. This will solve NOTHING.
    It will also cost too much to enforce.

    If someone chooses to keep their place empty, so be it – they are still paying taxes and utilities.

    • Reply
      Luigi Vampa 2 months ago

      The outrage! How many empty properties do you have lying around? Serious question.

    • Reply
      Elle 2 months ago

      Agreed. Already wrote to my council rep to voice my concerns. The “eat the rich” divisiveness needs to stop.

  • Reply
    janice dickson 1 month ago

    Covid-19 is causing rent prices to plummet. There’s more affordable rentals than I have ever seen in the last 10 years. Perhaps we should have COVID-20, COVID 21, COVID 22 and so on. That even better than vacancy tax.

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