Vacant Home Tax

A vacant home tax is a municipal charge on residential properties that sit unoccupied for more than a set portion of the year, as defined in the local bylaw. It is a tool that some Canadian cities use to discourage owners from leaving homes empty in tight housing markets.

Where a vacant home tax is in force, the owner must file a declaration each year stating whether the property was occupied, and for how long. A home used as a principal residence, or rented to a tenant for at least the required period, normally qualifies for an exemption. If the property does not meet an exemption, the municipality levies the tax, usually calculated as a percentage of the property's assessed value and billed through the annual property tax account.

How the tax is administered

Declarations: owners report occupancy details each year, often by a stated deadline; a late or missing declaration can be treated as vacant and taxed.
Assessment basis: the charge is generally a percentage of assessed value rather than a flat fee.
Collection: unpaid amounts can be added to the property tax roll, where they may attract interest and, in some cases, become an amount owing against the property.
Exemptions: categories usually include owner-occupancy, qualifying tenancy, properties under renovation with permits, and estates or owners receiving care. Exact rules are municipal, so confirm them with the city.

Vacant home tax compared with other empty-home measures

Measure	Level	Applies to
Vacant home tax	Municipal	Homes in a city that has enacted one
Underused Housing Tax	Federal	Certain owners of vacant or underused residential property, with an annual return
Speculation and vacancy tax	Provincial (British Columbia)	Owners in designated areas of B.C.

These regimes are separate. An owner could be subject to more than one, and each has its own filing and exemption rules.

Why it matters to a borrower

For anyone buying a second home, a condominium left empty, or an investment property that may sit between tenants, the vacant home tax is an ongoing carrying cost to budget from the start, alongside land transfer tax, insurance and maintenance. Because the charge is typically a percentage of assessed value, it rises as assessments rise. A lender reviewing affordability may treat it as a recurring obligation, and an unpaid balance registered against the property can complicate a refinance or a sale. Landlords also weigh the tax against the rent a unit could earn, and the broader list of ownership costs is covered in the guide on the true cost of owning a home in Canada.

Frequently asked questions

Who has to pay the vacant home tax?

Owners of residential property in a municipality that has enacted a vacant home tax. Each year they must declare whether the home was occupied and for how long. If the property does not meet an exemption, such as owner-occupancy or a qualifying tenancy, the tax is levied on the property tax account.

Is the vacant home tax the same as the Underused Housing Tax?

No. The Underused Housing Tax is a federal measure that requires an annual return from certain owners of vacant or underused residential property. A vacant home tax is municipal and applies only inside the city that created it. An owner can be subject to both, so each set of rules should be checked separately.

What happens if I forget to file the declaration?

In many cities a missing or late declaration is treated as though the home were vacant, which can trigger the tax plus a penalty. Amounts and appeal processes differ by municipality. Owners should confirm deadlines and exemption categories with their city and keep proof of occupancy, such as a lease or utility records.