The Real Story Behind Canada’s Vacant Home Tax

SECTION 1 — INTRODUCTION –>

Miss one annual declaration and a Toronto home assessed at $920,000 could land you with a $27,600 tax bill. The same mistake in Vancouver would cost $50,000 on a $1 million property. That is not a penalty for leaving the house empty. That is the default result of failing to submit a simple online form on time — even if you live in the property full-time. Canada’s municipal vacant home taxes have quietly become one of the most expensive compliance traps in residential real estate, and the rules vary sharply depending on which city you own in.

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This article is general information only and does not constitute professional advice. For your specific situation, consult a qualified professional.

Vancouver launched its Empty Homes Tax in 2017 at 1% — the first municipal tax of its kind in Canada. Toronto followed in 2022 at 1%, and Ottawa joined in 2023 with a 1% rate. What started as a modest compliance tool has escalated fast: Vancouver now charges 5%, Toronto jumped to 3% in 2024, and Ottawa caps repeat vacancies at 5%. The core mechanism is the same across all three cities — every residential property owner must file an annual declaration of occupancy — but the rates, deadlines, and exemptions differ enough that a strategy that works in one city can fail in another. If you own property in any of these cities, or in places like Hamilton or Windsor that have their own versions, the rules apply to you whether you live in the home or not. Here’s what you actually need to know.

The central concept here is the vacant home tax — a municipal levy on residential properties that sit empty or underused for more than six months in a calendar year. Each city sets its own rate, defines its own exemptions, and runs its own declaration and audit process. What I tend to notice is that most owners assume the tax only applies to obviously empty properties — boarded-up houses or condos with no furniture. In practice, it catches people who rented their place for five months instead of six, or who spent the winter abroad and came back in June. The six-month threshold is tighter than it sounds.

If you’re thinking about buying in one of these cities, or already own and are unsure how the rules apply, understanding the cost differences and compliance requirements across each market is the first step. For a broader look at where Canadian real estate is headed, see our piece on whether Canadian home prices will keep rising.

What the tax actually costs in Vancouver, Toronto, and Ottawa

The headline rate tells you part of the story. The real cost depends on the assessed value of your property, and assessed values — especially in Toronto — can be significantly lower than market value because MPAC has not done a province-wide reassessment since 2016. A house that would sell for $1.4 million might have a Current Value Assessment (CVA) of $920,000, meaning the tax on it as a vacant property in Toronto would be $27,600, not $42,000. That is still a punishing bill, but it is not based on what you could sell the house for today.

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The gap between cities matters. A Vancouver property assessed at $2 million and declared vacant owes $100,000 per year. The same property in Ottawa would owe $20,000. In Toronto, $60,000. These are annual charges on top of regular property tax, mortgage payments, and any strata fees or maintenance costs. For investors, that changes the math on carrying a property between tenants. A gap of even a few months between leases can tip the property over the 184-day threshold and trigger the full tax.

And the rates are not static. Vancouver started at 1% and now sits at 5%. Toronto went from 1% to 3% in two years. Ottawa caps repeat vacancies at 5% under its graduated rate structure. These are not fixed charges — cities are deliberately raising them to force empty properties into the rental or ownership market. What makes financial sense today may not make sense next year if the rate changes again. For a closer look at how these taxes factor into investment decisions, read our analysis of why Canadian real estate investors are looking beyond major cities.

Where owners get caught out by the vacant home tax

Thinking you do not need to declare if you live there

This is the most common mistake and the most expensive. Every owner must file an annual declaration — even if the property has been their sole residence for 20 years. In Toronto, the declaration window for the 2026 tax year runs from November 1, 2026 to February 28, 2027. Miss that window and the property is automatically deemed vacant. The city sends a tax bill for 3% of the assessed value, plus a $250 fine. There is no grace period for long-term residents. What I tend to notice is that people who own multiple properties often assume the declaration only applies to their investment units, not their own home. It applies to every residential property you own in that city.

Assuming short-term rentals count as occupied

This is where the six-month rule bites hardest. Occupancy requires someone to live in the property for at least 184 days of the calendar year. In Toronto, a lease must be for a minimum of 30 consecutive days to count toward that threshold. Airbnb bookings of three or four nights do not count, even if the property is booked 300 days a year. The same rule applies in Vancouver and Ottawa. If you own a condo that you list on short-term rental platforms and it is vacant for even a few weeks across the year, you may fall short of the occupancy threshold and owe the full tax. The only workaround is to secure a single long-term tenant for at least six months, or live there yourself for six months.

Believing exemptions are automatic

Each city offers exemptions — for renovations, death of the owner, medical care, or court orders — but none of them apply automatically. You must claim the exemption on your declaration and provide supporting documents. A renovation exemption in Toronto requires an active building permit, not just a contractor’s invoice. A medical exemption requires a letter from the care facility. If you claim an exemption without the paperwork and get audited, the city will reassess the property as vacant and bill you the tax plus interest. The audit window is typically 60 days to respond, and the reassessment process can take four to nine months. The exemption is only as good as the documentation you kept.

Buying a property without checking VHT status

In Toronto, the vacant home tax attaches to the property, not the owner. That means if you buy a house and the previous owner missed a declaration or owes back taxes, the liability can transfer to you at closing. Standard due diligence in Toronto now includes confirming the property’s VHT status before signing. The same risk exists in Vancouver and Ottawa. If you are buying a property that has been sitting empty during the marketing period — common with estate sales or renovator specials — the previous owner’s failure to file could become your bill. Ask your lawyer to include VHT clearance as a condition of closing.

How to handle the vacant home tax in 2026

Understanding the 184-day occupancy rule

The single most important number in any vacant home tax regime is 184 days. If the property is occupied as a principal residence by the owner, a permitted family member (spouse, parent, child, sibling), or a tenant under a written lease of at least 30 days for a total of 184 days or more in the calendar year, it is not vacant. Each city defines “permitted occupier” slightly differently, but the core rule is the same. The occupancy does not need to be continuous — 184 separate days spread across the year counts — but it must total more than half the year. If you own in Vancouver, you also need to check whether you owe the BC Speculation and Vacancy Tax separately; it is a provincial levy that applies in addition to the municipal Empty Homes Tax.

Filing your annual declaration on time

The declaration process is straightforward but unforgiving. In Toronto, you visit the property tax portal, log in with your property roll number (found on your property tax bill), complete the short declaration form, and submit it before the February deadline. Vancouver uses the Empty Homes Tax portal with your folio number. Ottawa uses a similar system with a March deadline. The form asks whether the property was occupied, by whom, and for how long. If you claim an exemption, you will need to upload supporting documents at the time of filing. The whole process takes about ten minutes — but only if you do it before the deadline. After that, the property is deemed vacant and the full tax applies.

• 1
  Find your property roll or folio number

  This is printed on your annual property tax bill. In Toronto, it is called a roll number. In Vancouver, a folio number. You cannot access the declaration portal without it.

• 2
  Log into the city’s declaration portal

  Toronto: property tax portal. Vancouver: Empty Homes Tax portal. Ottawa: Vacant Unit Tax portal. Each requires your roll/folio number and may ask for additional verification.

• 3
  Complete the declaration

  Indicate whether the property was occupied for 184+ days in the tax year, by whom, and under what arrangement. If claiming an exemption, upload proof at this stage.

• 4
  Submit and save the confirmation

  Once submitted, save or print the confirmation page. Keep this with your records for at least seven years in case of an audit.

Claiming an exemption properly

Exemptions are specific and require proof at filing time. The major categories across all three cities include: death of a registered owner (requires death certificate), major renovations with an active building permit (permit number and contractor details), owner in hospital or long-term care for at least six months (facility letter), court order prohibiting occupancy, transfer of ownership during the tax year, and properties actively listed for sale for at least six months (Ottawa only). A common gap I see is the “snowbird” scenario — someone who spends five months in Florida and seven months in Toronto. That works because the Toronto occupancy totals 244 days. But if you spend six months and one day away, you are under 184 days and the property is vacant. Track your days carefully.

Preparing for an audit and keeping records

Municipalities audit VHT declarations using risk-based triggers: properties declared vacant in prior years, low utility consumption, no principal residence insurance, or random sampling. If selected, you have 60 days to submit supporting documentation. Keep lease agreements, renovation permits, and medical documentation for seven years. Keep utility bills for at least three years. Declaration confirmations should be kept for the full seven-year window. If the audit finds you misrepresented the property’s status, the penalty is the tax owed plus interest, and potentially fines up to $10,000 for false declarations. Several prosecutions in Toronto in 2024–2025 resulted in fines of $5,000 to $8,000, not including legal costs. Having a secure place to store these documents — like a FOWORE 6.5 cu ft digital safe — makes it easier to produce records on short notice.

The rules are evolving. Ottawa introduced graduated rates for repeat vacancies in 2026. Hamilton is considering its own version. Calgary has proposed one. If you own in a city that does not currently have a vacant home tax, that could change in the next few years. For a broader view of where Canadian housing policy is heading, see our take on whether Canada’s housing bubble will ever burst.

Frequently asked questions about Canada’s vacant home tax

Why this tax is only going to spread

Every city that has introduced a vacant home tax has raised its rate within a few years. Vancouver went from 1% to 5%. Toronto doubled and then tripled its rate. Ottawa introduced graduated caps for repeat vacancies. More cities — Hamilton, London, Halifax, Calgary — are actively considering their own versions. The provincial government in Ontario extended the authority to adopt these taxes to all single- and upper-tier municipalities in 2024. The direction of travel is clear: more cities, higher rates, stricter enforcement. Treat the annual declaration as a fixed task on your calendar, not something you can skip because “nothing changed.” The cost of missing it is now measured in tens of thousands of dollars, not administrative fees.

Remember: this article is general information only. For advice on your specific situation, speak to a qualified professional.

If this was useful, you might also want to read Why more Canadians are selling their homes to live mortgage-free.

Sources and Further Reading

The truth about buying foreclosed properties in Canada and the risks involved — A practical guide to distressed property purchases, including how hidden tax liabilities like VHT can surface after closing.

The future of commercial real estate in Canada after the work-from-home shift — Explores how shifting occupancy patterns are reshaping property values and municipal tax policy across Canadian cities.

Mondaq (2026). Vacant Home Tax 2026 Update: Exemptions, Appeals, Deadlines, Audits and How to Challenge a Vacant Home Tax Assessment. 🔗

City of Toronto (2026). Vacant Home Tax Program. 🔗

City of Vancouver (2026). Empty Homes Tax. 🔗

City of Ottawa (2026). Vacant Unit Tax. 🔗