Builders seek extension on Toronto’s new vacant homes tax

Toronto region homebuilders are asking the city to extend the time they have to start paying the new vacant home tax on unsold housing units.

The 1 per cent tax on empty homes doesn’t apply to buildings under construction. But it does apply to condos or other homes that are owned by the developer if they have been vacant for more than six months in 2022 and are within the residential tax class, said Casey Brendon, director of Revenue Services with the city.

While most newly built homes are pre-sold before construction begins, builders often have some unsold inventory even after a building is occupied and has been registered on the municipal tax roll, said David Wilkes CEO of the Building Industry and Land Development Association (BILD), which represents GTA homebuilders.

He met last month with councillor Brad Bradford, chair of Toronto’s planning and housing committee, a city staffer and a representative of Mayor John Tory’s office.

Wilkes said homebuilders are looking “for a reasonable extension” that respects the intent of the bylaw.

“A two-year extension would certainly be something that would make sense for us,” he told the Star.

The city introduced the tax as one means of discouraging owners from leaving their properties vacant while Toronto is experiencing a housing crisis.

Wilkes said it’s not clear how many unsold units are sitting empty but it could take a year or longer in current real estate market conditions to sell those empty homes. Many of them would be more expensive, larger two- and three-bedroom units, making the tax, equal to 1 per cent of the value of the home, “prohibitive.”

“We are working with the city to resolve that issue and we hope that we’ll be able to do so for 2023, the current tax year,” he said.

“BILD representatives have suggested additional exemption criteria that could apply to newly-built homes and residential condominium units,” Brendon wrote in an email to the Star.

At the meeting last week, “the city took note of the development industry’s feedback and will consider it. There were no decisions arising from this meeting,” Brendon said.

Bradford did not answer questions on what was discussed at the meeting and what kind of amendments the industry is seeking.

Instead, he sent a written statement on the vacant homes tax, which was introduced “in an effort to increase the availability of housing in Toronto by discouraging residents from having their properties sit empty,” he wrote.

“It’s important to me to continue hearing a range of perspectives, feedback, and suggestions from those across Toronto. Residents, stakeholders, and members of industry have played a role in sharing their suggestions to the (Vacant Home Tax) VHT bylaw for consideration, using the many channels that exist for public feedback to the city,” he added.

Tory’s press secretary Taylor Deasley said in an email that staff from the mayor’s office and the city “have met and continue to talk with numerous stakeholders who could be impacted by the Vacant Home Tax, including BILD, local residents, and snowbirds.” And “consulting with stakeholders is an important part of implementing any new tax or bylaw.” As of Tuesday morning 88.1, per cent of homeowner declarations had been received, Deasley added.

Last week, the original Feb. 2 tax deadline was extended, as many homeowners had not returned the mandatory form to declare the status of their property.

Residents now have until the end of the month to return it without penalty. If owners fail to declare after that their property may be deemed vacant, according to the city’s website. Empty properties will be taxed at one per cent of the current value assessment (CVA) of the home.

It’s not known exactly how many properties are empty. A similar program was introduced in Vancouver in 2017.

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