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The vacant home tax Canada owners hear about most is now the city kind, not the federal one. Ottawa’s Underused Housing Tax has been eliminated for 2025 and later years, though returns and tax for 2022, 2023 and 2024 still count. Toronto’s own Vacant Home Tax is still running, at a flat 3% of what the property is assessed at.
What happened to the federal Underused Housing Tax?
The Budget 2025 Implementation Act received royal assent on March 26, 2026. It changed the Underused Housing Tax Act so that owners don’t file a return or pay the tax for 2025 or any later calendar year.
Affected owners do not need to file a return or pay the underused housing tax (UHT) for 2025 and subsequent calendar years.
Introduction to the Underused Housing Tax, canada.ca
That doesn’t wipe the past. The same page says the requirement to file and pay still applies to 2022, 2023 and 2024. If you skipped a return for one of those years, don’t assume the change covers you. Check the CRA page on what has changed, and look at your own file.
How does Toronto’s vacant home tax work?
Empty for six months or longer in a tax year? Then Toronto calls it vacant. Toronto asks every residential owner to declare the occupancy status each year, by April 30, even if you live in the house. And if you don’t declare, the City treats the home as vacant and sends a bill.
| Item | Toronto rule |
|---|---|
| Rate since the 2024 tax year | 3% of assessment |
| Vacant means | Unoccupied six months or longer in the year |
| 2025 bill instalments | September 15, October 15, November 16, 2026 |
| Dispute the 2025 bill by | December 31, 2026 |
| Interest on overdue amounts | 1.25% a month |
What does 3% cost?
A lot. Assessed at $692,140, the home owes $20,764.20. At $1,000,000 it’s $30,000. Compare that with the ordinary 2026 property tax rate of 0.767311%, which brings about $5,311 on the first home. Leaving it empty, or forgetting the form, costs roughly four times the usual bill.
To see what your regular bill looks like, use the property tax calculator. Our page on property tax in Toronto explains the rate.
Which vacant homes are exempt?
Toronto lists several exemptions. You still need to declare and claim them.
They include the death of the owner (up to three years), an owner who has moved into care (up to two years), major repairs or renovations with permits, a change of legal ownership during the year, a job that requires you to be in Toronto, a court order banning occupancy, and medical need for a secondary home. Developers can claim new inventory for up to two years.
Say your mother moved to long-term care last spring, and her house sits empty. That may fit the care facility exemption. But you have to make the declaration. Silence won’t do it.
What if you rent the home out?
Once a tenant lives there it isn’t vacant, but you still declare it. The income is taxable, so the rental income tax calculator shows what you’d owe on it. Before you rent, run the numbers in the rental property calculator, because a tenant brings costs too.
We haven’t confirmed how the City treats short stays or a home rented for part of the year. Ask the City before you count on it.
What if you miss the deadline or get it wrong?
The big mistake is not declaring at all, because the City then treats the home as vacant by default and the 3% bill lands. The next is a wrong declaration. The City says a false declaration, or failing to give information when asked, may bring a fine as high as $10,000, plus the tax itself. Overdue amounts also pick up interest every month, as the table shows.
If a bill looks wrong, the dispute window for the 2025 bill runs until December 31, 2026. Mark it on the calendar now, because waiting until January means you’ve lost the chance to challenge it.
Buying a home in Toronto? The land transfer tax calculator covers a one-time cost that comes with it. Other cities and provinces have their own vacancy rules. We didn’t check them here, so look at your own municipality’s page.
Our sources
The federal facts come from Canada Revenue Agency pages on the Underused Housing Tax, read in October 2026. The Toronto rate, exemptions, fines and dates come from the City of Toronto’s Vacant Home Tax page. The examples are our own arithmetic. This site has no link with the CRA or the City.
Frequently asked questions
Is the federal Underused Housing Tax still charged?
Not for 2025 and later years. The CRA says the filing and payment duty still applies to 2022, 2023 and 2024.
What is the Toronto Vacant Home Tax rate?
The City says it is 3% of assessment from the 2024 tax year.
Do I declare if I live in the house?
Yes. Toronto asks every residential owner to declare each year, whatever the occupancy.
What is the penalty for a false declaration?
Up to $10,000 in fines plus the tax itself, according to the City of Toronto.
Does renting the home avoid the tax?
An occupied home is not vacant, but you still declare it. We did not confirm the rules for partial-year or short-stay rentals.
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