Vacant Home Tax
A Vacant Home Tax is a municipal levy on empty residential properties to discourage speculation and boost housing supply.
September 30, 2025
What is Vacant Home Tax?
A Vacant Home Tax is a municipal tax levied on residential properties that remain vacant for extended periods, typically six months or longer. Cities like Toronto, Ottawa, and Vancouver have implemented such taxes to discourage speculation and increase rental availability.
Why Vacant Home Tax Matters in Real Estate
Vacant Home Taxes matter in real estate because they address housing shortages at the municipal level. They motivate owners to rent out unused properties, generating additional housing supply and tax revenue for city programs.
Example of Vacant Home Tax in Action
A homeowner in Toronto leaves a condo empty for most of the year. They are assessed a Vacant Home Tax of 1% of the property’s assessed value unless exemptions apply.
Key Takeaways
- Implemented by municipalities to address vacancy.
- Applies when homes are left empty for extended periods.
- Encourages owners to rent out properties.
- Rates typically set as a percentage of assessed value.
- Supports local housing affordability measures.
Related Terms
- Speculation and Vacancy Tax
- Underused Housing Tax
- Housing Affordability
- Rental Market
- Municipal Property Tax
Canadian respondents were more likely to expect an undersupply of development/redevelopment equity capital (63%) than debt capital (46%) in 2027. These are survey expectations, not measured financing volumes. Source: PwC and ULI, Emerging Trends in Real Estate 2027, pp. 136–137. Original chart.
Toronto census metropolitan area housing starts fell from 37,718 units in 2024 to 26,087 in 2025, a 30.8% decline (rounded to 31%). Starts measure construction begun, not completed homes. Source: CMHC, as cited in PwC and ULI, Emerging Trends in Real Estate 2027, p. 145. Original chart.
Illustrative calculation: a $4.5-million value ceiling versus income-based capacity of about $4.25 million at 4%, $3.62 million at 5% and $3.13 million at 6%. Assumes 50-year amortization and 1.15 debt coverage.
Source: Department of Finance missing-middle backgrounder and Budget 2026 Chapter 3, November 5, 2026. Fiscal-year funding starts are not home-completion dates.
