Council could impose a one per cent tax on vacant homes at the start of next year as a way to help ease the city’s affordable housing crisis and raise revenue during a looming economic recovery from COVID-19.
City staff propose doing public consultations with the aim of having the tax in place for Jan. 1, 2022. Residential property owners would be required to make a declaration each year by the deadline and could be subject to a city audit to verify whether the home is vacant or not.
Coun. Ana Bailao (Ward 9 Davenport), the mayor’s affordable housing advocate and one of the councillors who pushed for the tax, said the scheme presented by staff is a good model.
“The reality is … the success of this tax is not to be collected. The idea is to have these houses being turned into somebody’s home,” she said.
Keeping a home locked up and unavailable for habitation is up to the homeowner, but it will come at a price, Bailao said.
The staff plan for implementing a vacant home tax comes in a report released this week to be debated at Mayor John Tory’s executive committee on July 6.
Faced with mounting budget pressures, committee will also review other valuable ways for the city to raise additional funds. Many of those options, like a personal vehicle tax, have been politically unpalatable since former mayor Rob Ford was in office. There are no recommendations from staff on that report.
Any final decision will be up to council at a meeting starting July 14.
Tory’s spokesperson Don Peat said the mayor will continue to support moving forward with a vacant home tax “in a responsible way.”
The policy behind a vacant home tax, staff wrote in their report, is to help with the availability and affordability of housing stock on the market by creating a disincentive for owners to keeping properties vacant.
“The effect of the tax in the marketplace is that of a signal that housing stock and supply is important for people as homes, and not primarily as a buy-hold speculative commodity without any public regulation,” the report says.
Staff are proposing the initial tax be one per cent of the assessed home value. For example, if a home that was declared vacant was assessed at $1 million in 2022, the owner would be subject to a $10,000 annual tax under the staff-proposed scheme.
“Simply announcing” the tax start date of Jan. 1, staff wrote, would likely cause some owners to seek out tenants to avoid paying the tax.
City staff propose that homes be considered vacant if the property is not the owner’s principal residence or occupied by a tenant or permitted family member or friend for more than six months out of the year. Some properties will be exempt from the tax, including when the registered owner dies, is receiving care or properties undergoing major renovations.
The tax would not apply to “snowbirds” — people who spend winter months in warmer climates — if their Toronto property is their primary home.
The city expects a one per cent tax could garner between $55 million and $66 million each year. That estimate is based on the results of a similar tax in Vancouver. Staff say the number of vacant homes in Toronto is currently unknown.
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Start-up costs to implement the tax are estimated to be $11 million and annual operating costs are expected to total $3.1 million, which would be netted from whatever taxes are collected.
While the federal government announced its intentions to implement a nation-wide vacant home tax, city staff said both could co-exist and a federal tax does not preclude the city from taxing its residents.
Toronto vacant home tax of one per cent could be in place at the start of next year, says city staff - Toronto Star
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