Real Estate

A question about Toronto vacant homes tax

  • Last Updated:
  • Mar 9th, 2022 4:57 pm
[OP]
Deal Guru
Dec 5, 2006
13074 posts
8319 upvotes
Markham

A question about Toronto vacant homes tax

One of my relatives own a condo in Toronto. He only has this condo and has been living there. He is not citizen but has PR card.

He has decided to go back to china for few years but want to keep his condo instead of renting out

In this case, does he need pay tax on vacant homes?

Thanks
16 replies
Deal Addict
User avatar
Nov 30, 2005
1849 posts
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Ottawa, ON
For the new Toronto tax, it won't not apply if he still declares it as his primary residence.

The new federal vacant tax also doesn't apply to permanent residents.
[OP]
Deal Guru
Dec 5, 2006
13074 posts
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Markham
ZxExN wrote: For the new Toronto tax, it won't not apply if he still declares it as his primary residence.

The new federal vacant tax also doesn't apply to permanent residents.
Thanks
Deal Fanatic
Jul 3, 2011
6517 posts
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Thornhill
ZxExN wrote: For the new Toronto tax, it won't not apply if he still declares it as his primary residence.
As long as it is deemed vacant for 6+months It will apply.
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Nov 30, 2005
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licenced wrote: As long as it is deemed vacant for 6+months It will apply.
That's incorrect. Current plan is for it to be modelled similar to the tax in Vancouver. Principal residences are exempt.

Caveat though is plan is not firm yet so who knows what will be final.

"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."
Deal Fanatic
Jul 3, 2011
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Thornhill
ZxExN wrote: That's incorrect. Current plan is for it to be modelled similar to the tax in Vancouver. Principal residences are exempt.

Caveat though is plan is not firm yet so who knows what will be final.

"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."
You misunderstand. Having it as your principal residence does not give a homeowner a blanket exemption on the tax. It would be stupid way to defeat and manipulate the intent of the tax. The only reason principal exemption is mentioned is to make thedistinction between and investment property and a homeowner occupied home.
Properties not subject to the tax
Most properties will not be subject to the Empty Homes Tax, including those:

Used as a principal residence by the owner, their family member or friend, or other permitted occupier for at least six months of the vacancy reference year


“principal residence” means the usual place where an individual lives, makes his or her home and conducts his or her daily affairs, including, without limitation, paying bills and
receiving mail, and is generally the residential address used on documentation related to billing, identification, taxation and insurance purposes, including, without limitation,
income tax returns, Medical Services Plan documentation, driver’s licenses, personal identification, vehicle registration and utility bills and, for the purposes of this by-law, a
person may only have one principal residence;

2.3 Residential property is considered to be vacant property if:
(a) it has been unoccupied for more than six months during the vacancy reference
period; or
(b) it is deemed to be vacant property in accordance with this by-law.
This clause makes it clear when a principal residence is exempt
3.3 A vacancy tax is not payable under this By-law for a parcel of residential property if the residential property was unoccupied for more than six months during the vacancy reference period because all occupiers who were previously occupying the residential property as a principal residence or all tenants or subtenants who were previously occupying the residential property for residential purposes are residing in a hospital, long term or supportive care facility, except that this exemption shall not be allowed for more than two consecutive vacancy reference periods.
https://bylaws.vancouver.ca/11674c.PDF
Deal Addict
Jan 30, 2013
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RICHMOND HILL
licenced wrote: As long as it is deemed vacant for 6+months It will apply.
if it's declared the primary residence, would the CRA go after his/her wealth/income globally?
Deal Fanatic
Mar 15, 2005
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ZxExN wrote: For the new Toronto tax, it won't not apply if he still declares it as his primary residence.

The new federal vacant tax also doesn't apply to permanent residents.
If he is declaring a home as his primary residence in Toronto, he would likely still be a taxable resident of Canada while living abroad
Deal Addict
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Nov 30, 2005
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licenced wrote: You misunderstand. Having it as your principal residence does not give a homeowner a blanket exemption on the tax. It would be stupid way to defeat and manipulate the intent of the tax. The only reason principal exemption is mentioned is to make thedistinction between and investment property and a homeowner occupied home.



This clause makes it clear when a principal residence is exempt

https://bylaws.vancouver.ca/11674c.PDF
You're using residential property and principal residence interchangeable when it convenient for you and that's where you are misunderstanding the law. The only para that matters and is official is this:

Vacancy tax
2.1 A vacancy tax shall be imposed on every parcel of taxable property in accordance with
this By-law.
Unoccupied property
2.2 Residential property is considered to be unoccupied in the following circumstances:
(a) the residential property is not the principal residence of an occupier; or
(b) the residential property is not occupied for residential purposes by an arm’s
length tenant under a tenancy agreement, or by an arm’s length subtenant under
a sublease agreement, for a term of at least 30 consecutive days.

If it's a principal residence, it is considered occupied, period. Think about for a moment and you will understand why charging someone's principal residence is not the intent tax. It is to charge investors and persons with 2nd properties to allow it to be available for rent.

OP, notwithstanding my interpretation, I could all be wrong so seek advice from an accountant who should be able to give you the correct answer.
Deal Addict
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Nov 30, 2005
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Ziggy007 wrote: If he is declaring a home as his primary residence in Toronto, he would likely still be a taxable resident of Canada while living abroad
CRA taxation is different than what the OP is asking about which is applicability of the vacancy tax.
Deal Fanatic
Jul 3, 2011
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Thornhill
I am using the definitions of principal residence. Both by the municipality and the CRA determinant.
“principal residence” means the usual place where an individual lives, makes his or her home and conducts his or her daily affairs, including, without limitation, paying bills and
receiving mail, and is generally the residential address used on documentation related to billing, identification, taxation and insurance purposes, including, without limitation,
income tax returns, Medical Services Plan documentation, driver’s licenses, personal identification, vehicle registration and utility bills and, for the purposes of this by-law, a
person may only have one principal residence;
So dont be arguing with me about it.

I am not going to argue with you to change your mind. I gave you the efinition, it is right there!

I can't think for you.
ZxExN wrote: You're using residential property and principal residence interchangeable when it convenient for you and that's where you are misunderstanding the law. The only para that matters and is official is this:

Vacancy tax
2.1 A vacancy tax shall be imposed on every parcel of taxable property in accordance with
this By-law.
Unoccupied property
2.2 Residential property is considered to be unoccupied in the following circumstances:
(a) the residential property is not the principal residence of an occupier; or
(b) the residential property is not occupied for residential purposes by an arm’s
length tenant under a tenancy agreement, or by an arm’s length subtenant under
a sublease agreement, for a term of at least 30 consecutive days.

If it's a principal residence, it is considered occupied, period. Think about for a moment and you will understand why charging someone's principal residence is not the intent tax. It is to charge investors and persons with 2nd properties to allow it to be available for rent.

OP, notwithstanding my interpretation, I could all be wrong so seek advice from an accountant who should be able to give you the correct answer.
Deal Addict
User avatar
Nov 30, 2005
1849 posts
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Ottawa, ON
licenced wrote: I am using the definitions of principal residence. Both by the municipality and the CRA determinant.

So dont be arguing with me about it.

I am not going to argue with you to change your mind. I gave you the efinition, it is right there!

I can't think for you.
What the f are you babbling on about, no one here is arguing with you about the definiton of principal residence.

Anyways neither of us are accountants that specializes in real estate so OP should seek professional opinion when there appears not be a common consensus. FYI just providing a different interpretation of the propose tax that hasnt even been finalized yet so get over yourself.
Deal Fanatic
Mar 15, 2005
5723 posts
1294 upvotes
ZxExN wrote: CRA taxation is different than what the OP is asking about which is applicability of the vacancy tax.
Agreed, but I have the sense OP wants to have their cake and eat it too but becoming a non-resident for Canadian tax purposes but leaving a tax free investment waiting for them when they get back.

Can't have it both ways
[OP]
Deal Guru
Dec 5, 2006
13074 posts
8319 upvotes
Markham
Ziggy007 wrote: Agreed, but I have the sense OP wants to have their cake and eat it too but becoming a non-resident for Canadian tax purposes but leaving a tax free investment waiting for them when they get back.

Can't have it both ways
Thanks for asking

Just clarify: this has nothing to do with CRA income tax.

Because we heard so many horrible stories that you cannot kick out the renters, so we are thinking just keep his condo as is in case he changes his mind and come back earlier. But on the other hand, vacant tax is a burden. So I was hoping vacant tax is only for investment property
Jr. Member
Aug 3, 2017
113 posts
24 upvotes
Well it's finally here. Came into affect Jan 1st.

https://www.toronto.ca/legdocs/bylaws/2022/law0097.pdf

I'm not educated in legal-ese but I don't think Toronto' s new bylaw cares if it is your principal residence or not. It just has to be declared occupied for at least six months with exceptions such as medical condition that prompts a hospital stay.

778-2.1. Vacant Unit.
A Residential Unit is a Vacant Unit if for more than six months during the Taxation Year, no
Self-Contained units comprising the Residential Unit are either:
A. the Principal Residence of the Owner or another Occupant; or
B. occupied for residential purposes by one or more Tenants in aggregate for at least six
months of the year.


Is this all that it takes? just say it's occupied, that's all? Any other work arounds?

Update: After reading it several times I think my layman brain gets it now. Your principal residence is exempt. Every other property is subject to this tax if empty for more than 6months. If am wrong please correct me.
Last edited by daydreamer7 on Mar 9th, 2022 6:12 pm, edited 2 times in total.
Sr. Member
Feb 28, 2006
501 posts
402 upvotes
daydreamer7 wrote: Well it's finally here. Came into affect Jan 1st.

https://www.toronto.ca/legdocs/bylaws/2022/law0097.pdf

I"m not educated in legal-ese but I don't think Toronto' s new bylaw cares if it is your principal residence or not. It just has to be declared occupied for at least six months with exceptions such as medical condition that prompts a hospital stay.

778-2.1. Vacant Unit.
A Residential Unit is a Vacant Unit if for more than six months during the Taxation Year, no
Self-Contained units comprising the Residential Unit are either:
A. the Principal Residence of the Owner or another Occupant; or
B. occupied for residential purposes by one or more Tenants in aggregate for at least six
months of the year.


Is this all that it takes? just say it's occupied, that's all? Any other work arounds?
Woah it's surprising there's little news about this. Wouldn't this potentially have an effect on the housing market?

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