Three vacancy taxes you might owe and not know about

Three layers of Canadian vacancy taxation can stack on a single residential property. The federal Underused Housing Tax (UHT) is 1% of property value annually, payable to the CRA by non-Canadian and non-permanent-resident owners of residential property — plus certain corporations and trusts. As of 2024, individual Canadian citizens and permanent residents are “excluded owners” and owe nothing and file nothing. Above that sits a patchwork of municipal vacancy taxes. The City of Toronto Vacant Home Tax (VHT) charges 1% of Current Value Assessment on properties left vacant more than six months in the year, declared annually around February. Vancouver’s Empty Homes Tax (EHT) is steeper — 3% of assessed value, declared in the same year cycle. Ottawa and Hamilton each charge 1% of assessment on vacant units. The taxes are independent: a non-resident owner of a vacant Toronto condo can owe federal UHT plus Toronto VHT plus capital gains on disposition. The calculator above runs your specific combination — ownership structure, property use, and location — and reports what you owe, with deadlines.

How to qualify for the exemptions

Most exemptions on these vacancy taxes come down to demonstrating that the property is actually being used. For federal UHT, the cleanest exemption is “principal residence” or “qualifying occupancy” by the owner or a relative. Renting to a qualified tenant for at least 180 non-overlapping days within periods of one month or longer also exempts. For municipal vacancy taxes, the protections are similar but with stricter documentation requirements — Toronto VHT requires the declaration form to be submitted whether or not the property is vacant, and a non-filing is treated as a deemed vacancy with the tax applied. Documentation buyers and sellers should keep: lease agreements with tenant signatures, utility bills showing usage during the claimed period, property tax bills matching the address, government identification with the property address listed as principal residence. Travel between properties (snowbirds with two Canadian homes, students with parental homes plus rental units) gets analyzed property-by-property — you can only designate one as principal residence for tax-exemption purposes in a given year. This is where a CPA or tax lawyer is genuinely useful; the rules look simple in summary but contain edge cases worth getting right before filing.

When vacancy tax exposure means it’s time to sell

The math on holding a vacant Toronto property: $1.5M condo, 1% VHT = $15,000 per year. Add property tax (1% of CVA = $15,000), maintenance fees ($600/mo = $7,200), insurance ($2,500), and miscellaneous maintenance ($3,000) and you’re at $42,700 in annual carrying cost on a property earning zero income. That’s a 2.85% drag on the property’s value, every year, before you account for opportunity cost of the trapped equity. The same money in a 4% high-interest savings account would earn $60,000 instead of losing $42,700 — an $103,000 swing per year. Vacancy taxes are designed to make this math unattractive, and they succeed: an increasing share of GTA non-resident-owned vacant condos are coming to market for exactly this reason. If your vacancy tax exposure is in the same range as the annual property tax, that’s the signal to model the sell-now scenario seriously. Capital gains on disposition, timing relative to the principal-residence designation rules, and currency considerations for non-resident owners all factor in. Book a 30-minute consultation for a tax-aware sale analysis — we’ll model the net you’d take home today vs. the carrying cost over the next 3-5 years.

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