The Impact to Real Estate Closings from the Vacant Home/Unit Tax in Ottawa and Toronto
There are new taxes that became effective as of January 1, 2023 for the Cities Ottawa and Toronto. Important to note for houses changing hands this year.
Seller’s responsible for declaration when house sells January 1 to the declaration date*.
Buyer’s responsible for the declaration when purchasing after the declaration date to December 31.
Similar to property taxes, the new taxes will form a lien on the property, and unpaid taxes will become the buyer’s responsibility.
*Note: The declaration date this year in Toronto is February 2, while Ottawa it is April 30.
For the details on each tax use the buttons below.
What is the Vacant Unit Tax and Vacant Home Tax?
These taxes were brought into the Cities of Ottawa and Toronto in an effort to encourage real estate investors to sell or rent their homes, instead of leaving them unoccupied.
Both taxes are 1 per cent of the assessed value of the property as determined by MPAC, and are based on the property’s occupancy status for the previous year. For example, if the home is vacant in 2022 the tax will become payable in 2023. The method to pay the tax is the same as when paying property taxes in Ottawa and Toronto.
The Cities of Ottawa and Toronto are both requiring a declaration to be submitted for all owned properties in the respectively.
Ready for the above? RealtiWeb is!
At LDD, we updated RealtiWeb last month to handle these new taxes. Including:
A new Vacant Home/Unit Tax issue to address this new tax;
New clauses for various documents; and
Updated our standard documents.
Update on April 14, 2023: The City of Hamilton has a similar Vacant Unit Tax that will be effective for 2024. It is important to note, that when a property subject to the Vacant Unit Tax in Hamilton is sold to an unrelated individual or corporation the new homeowner(s) will be exempted from the Vacant Unit Tax for the year that the sale took place.