Governments at all levels are prioritizing housing affordability, exploring various measures to help more Canadians purchase homes. One such measure is the vacant home tax, but what does it mean?
Vacant Home Tax: A Quick Overview
A vacant home tax is a tax imposed on residential properties that remain empty for a specific period. Its purpose is to encourage property owners to either sell or rent out their underutilized homes. Supporters argue that this will increase the housing supply, discourage speculation, and ease financial pressures on renters and potential homebuyers. Additionally, the tax revenue can be allocated toward housing affordability initiatives.
However, critics argue that this tax penalizes property owners who may have legitimate reasons for leaving their homes vacant, such as renovations or extended travel. They also express concerns about enforcement and administration challenges, including compliance and tax evasion.
In 2022, the federal government introduced a one percent Underused Housing Tax, and other jurisdictions have implemented similar taxes. Vancouver introduced a vacant home tax in 2017, generating approximately $115 million since its inception. Toronto implemented a one percent vacant home tax on residential units vacant for more than six months, starting in February 2023.
Has Toronto’s Tax Been Effective?
Despite high hopes, the results of Toronto’s vacant home tax have been underwhelming. In April 2023, it was reported that only 2,100 properties out of approximately 775,000 declared as empty. Experts note that this small number suggests that vacant homes are not the main cause of high prices or rents in the city.
Experts Call for Additional Measures
While a vacant home tax is a step toward addressing housing affordability, experts emphasize that it is just a small piece of the puzzle. The Canadian housing market faces a supply shortage, with hundreds of thousands of homes needed to meet demand. To truly tackle the issue, experts argue for broader measures, such as reforming zoning laws and incentivizing multi-purpose housing.
In conclusion, while vacant home taxes may have good intentions, they alone cannot solve the housing affordability problem. Building more housing stock remains the ultimate solution to address scarcity and make housing more affordable.
– The Star: [Link to the article](https://www.thestar.com/news/gta/2023/04/30/just-2100-properties-reported-empty-through-torontos-new-vacant-homes-tax.html)
– CBC: [Link to the article](https://www.cbc.ca/news/canada/british-columbia/vancouver-empty-home-tax-increases-1.6839316)