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;
- U.S. citizens;
- Legal matters pertaining to court orders prohibiting occupancy;
- 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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