Toronto’s Vacant Home Tax & Its Impact on Airbnb Owners (2025 Update)

 

What is a vacant home tax in Toronto? 

The city’s council reported that the vacant home tax (VHT) in Toronto on unoccupied homes for more than six months of the previous year onwards will be charged 3% of the property’s Current Value Assessment (CVA).

This policy aims to increase housing availability in the city by encouraging property owners to keep their homes occupied or sell them to people who will.

What quantifies as a vacant home? 

If a house or apartment has been empty for more than six months in the past year, it’s considered vacant. The property must not meet any of the exemption criteria, which include:

  • The property is the owner’s principal residence, or a permitted occupant or a tenant occupies it.
  • The property is undergoing repairs or renovations.
  • The owner is in the care of a person, a court order, or a vacant new inventory.
  • The property is occupied for full-time employment.

And if you haven’t heard it, in Toronto’s vacant home tax, Airbnb is also affected.

Mandatory Declaration For Occupancy Status:
What Homeowners Need to Do

The Vacant Home Tax requires all residential property owners, including property owners who are renting their property, to declare their property’s occupancy status annually.  Here are the important details that you need to know:

  • Who must submit the declaration form?
    • All residential property owners in Toronto must submit a declaration for occupancy status.
  • Deadline: You must submit the declaration form by 30 April 2025. 
  • What happens if you don’t declare?
    • Your property will be automatically classified as vacant.
    • Your property is subjected to a 3% tax on the property’s Current Value Assessment (CVA). 
    • You will be fine for non-compliance.
  • 3 ways to submit the declaration form:
    • Online submission: Visit Toronto’s official Vacant Home Tax portal (the safest and quickest way to submit your declaration)
    • By phone: Call 311 if you are a Toronto resident or 416-392-2489 if you are outside of Toronto. (For occupied properties only.)
    • By mail: Submit the declaration form before the deadline. 

How does Toronto’s vacant home tax Airbnb affect its owners?

The Toronto vacant home tax Airbnb can affect owners in some ways:

  1. Higher Cost: A 3% tax on the property’s Current Value Assessment (CVA) can potentially discourage property owners from keeping their properties vacant. It encourages them to rent or sell their properties, which can impact the availability of short-term rental options like Airbnb.
  2. Limited Short-Term Rentals: Owners cannot rely on their Airbnb business if their property is vacant for most of the year. This new regulation can limit the number of properties available for short-term rentals, which may affect the profitability of Airbnb owners.
  3. Stricter Regulations & Reporting: Airbnb hosts may need to provide rental history and documentation to prove their property is not vacant.
  4. Potential exemptions: Property owners may be eligible for exemptions from the VHT if their properties meet specific criteria, such as being the owner’s principal residence or a permitted occupant or if the property is undergoing repairs or renovations. However, these exemptions may come with additional documentation requirements and scrutiny from local authorities.
  1. Increased Scrutiny: Airbnb and other short-term rental platforms may face increased scrutiny from local authorities, as they may be required to provide information on property owners and their rental activities. This could lead to more frequent audits and increased compliance costs for property owners.
  2. Fewer Airbnb Listings: More properties may shift to long-term rental to avoid the tax, affecting the number of Airbnb listings in Toronto. This could negatively impact hosts, travelers, tourism and local economies. 

Airbnb owners must stay updated about the Toronto vacant home tax Airbnb in their specific city, understand the exemptions, and evaluate their rental strategies to optimize their business under the new regulations.

How is Toronto’s vacant home tax Airbnb calculated? 

The tax rate applied depends on the year the property is considered vacant:

  • 2024 & onwards: 3% of the property’s Current Value Assessment (CVA). You can find your CVA on your property tax bill.

Toronto vacant home tax Airbnb calculation example : 

7-month Airbnb vacancy

Property’s CVA: $1,200,000

Vacant for 7 months in 2024 (not owner’s principal residence)

Tax rate (2024): 3%

Excess vacancy months: 7 months – 6 months = 1 month

VHT = CVA * Tax rate * Excess vacancy months

VHT = $1,200,000 * 3% * 1/12 month

VHT = $3,000

So, the property owner would owe $3,000 in Toronto vacant home tax Airbnb. 

What can Airbnb owners do? 

There are several options available for Airbnb owners to survive and thrive with the new regulation: 

  • Rent out the property: Rent out for at least six months of the year. It can be done through long-term rentals or using Airbnb for short-term rentals for less than six months.
  • Claim exemptions: Property owners can claim exemptions from the Toronto vacant home tax Airbnb if their property meets certain criteria. Each type of exemption requires specific documentation to be submitted by the owner claiming the exemption.
  • Consider tax deductions: Airbnb hosts may be eligible for tax deductions for expenses related to their rental activities. Hosts should keep accurate records of their expenses and consult with a tax professional to determine their eligibility for deductions.
  • Stay informed: Airbnb owners and hosts should stay informed about changes to local regulations and tax laws that may affect their rental activities. 

Conclusion

To sum up, property owners, including Airbnb owners, must comply with the VHT regulations to avoid fines and penalties. Declare the status of your property to prevent it from being classified as a vacant home. 

This tax program can encourage property owners to rent their place instead of leaving it unoccupied, and this will help increase housing availability in Toronto. Airbnb owners must meticulously plan their business strategies to comply with VHT and short-term rental regulations to reach their business goals. 

VHT can impact Airbnb’s short-term rental business model, as long-term rentals seem economically attractive. Things may look sour from here, but let’s hope for future adjustments based on policy reviews and public feedback. 

For more details, you can visit the City of Toronto website, dial 311, contact your local councillor and stay updated on the latest news about the Vacant Home Tax.