Is There A Home Vacancy Tax In Canada?

Yes, Canada has a federal vacancy tax, and Toronto enforces its own municipal Vacant Home Tax.

At the federal level, the Underused Housing Tax (UHT) applies a 1% annual levy on the value of residential properties owned by non-residents that are left vacant or underused. In addition, Toronto introduced a Vacant Home Tax (VHT) in 2023. This local tax is also 1% of a property’s assessed value if it sits unoccupied for more than six months in a calendar year. Cities like Vancouver and Ottawa have adopted similar measures, making vacancy taxes a permanent reality for investors.

For perspective, a downtown condo valued at $700K would trigger a $7,000 annual VHT if declared vacant. A detached home in Toronto’s east or west end worth $1.5M would mean a $15,000 annual charge. For many investors, these amounts shift the equation: renting out the property, even at modest cash flow, is often better than paying vacancy taxes.

TRREB market data indicate that, despite these taxes, demand for rental housing in Toronto remains intense, with a limited supply and rising rents. The vacancy tax is designed to encourage more units to enter the rental market, rather than sit empty as speculative holdings.

The Fox Marin Real Estate Team regularly advises clients on how to navigate these policies. Our investors often ask: Should I hold, rent, or sell? With over 450 five-star reviews and a proven track record, we help clients model their cash flow against potential taxes, explore tenant demand in micro-neighbourhoods, and determine the best path forward.

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