Nobody wakes up in the morning excited to read about municipal tax bylaws. It is dry. It is confusing. And in Toronto, it is becoming incredibly expensive.
If you own residential property in Toronto, you likely already know the sinking feeling of seeing a yellow letter from the City in your mailbox. It is the annual reminder for the Vacant Home Tax (VHT).
For the current 2026 filing season, which covers the 2025 calendar year, the stakes are significantly higher. The rate is no longer the old 1%. It is now 3%.
That is a massive number.
If your property is assessed at $1,000,000 and deemed vacant, you owe the city $30,000. That is not a typo. Thirty thousand dollars. For many people, that is an entire year’s salary after tax.
We are not just talking about paperwork here. We are talking about protecting your wealth. This guide will walk you through exactly what you need to know, how to declare, and how to keep that money in your pocket where it belongs.
The Reality Check: What is the VHT in 2026?
First, let’s clear up the timeline because it trips everyone up.
When people discuss the Vacant Home Tax 2026, they are usually referring to the declaration required right now, in early 2026. This declaration confirms the occupancy status of your home for the previous year, which is 2025.
Here is the math you need to be aware of.
The tax rate is 3% of the Current Value Assessment (CVA). This value is determined by MPAC, not your real estate agent. While your MPAC value might be lower than the market value, 3% is still aggressive.
For a property assessed at $800,000, the tax is $24,000. For a property assessed at $1,500,000, the tax is $45,000.
The goal of the tax is simple: force owners to either live in their units or rent them out to increase housing supply. If you leave it empty for more than six months in the calendar year, you pay.
The Critical Timeline
Missing a deadline in Toronto is expensive. The City has become much stricter with late declarations because they rely on the revenue.
For the 2026 filing season, the portal is open now. The deadline is typically the last business day of February.
There is a late filing period that usually extends until April, but you will be charged a fee. The fee is around $21, which does not sound like much. However, the real risk is not the fee. If you do not declare at all, the City will deem your home vacant by default.
Imagine getting a bill for $30,000 simply because you forgot to log in to a website. It happens to people every year. Do not let it be you.
Exemptions: How to Legally Minimize Liability
Most homes in Toronto are exempt because the owner lives there. That is straightforward. But life is complicated. Sometimes homes are empty, but they should not be taxed.
The City allows specific exemptions, but you need proof. If you just select an option without evidence, you are risking an audit.
Here are the main ways to avoid the tax liability:
Repairs and Renovations If you are fixing up a house, it might be empty. The vacancy must be necessary for repairs that affect safety or habitability. You cannot simply be painting the walls. It only applies if the repairs take more than six months. You need building permits. Quotes from contractors are not sufficient; the City wants to see an active permit number.
Principal Residence of the Owner If you live there, you are safe. If you are a snowbird and spend five months in Florida, you are fine. You just need to occupy the Toronto home for more than six months total in the calendar year.
Transfer of Legal Title If you bought or sold the house in 2025, it is effectively exempt for that year. The new owner is liable for the declaration but will not pay the tax. The proof required is the Land Transfer Deed.
Occupancy for Full-Time Employment This is for people who have a home elsewhere but need the Toronto unit for work purposes. You need to live there for at least six months of the year for work.
Death of the Owner The property is exempt for the year the owner died and potentially the following year, depending on the status of probate.
The Filing Process: Step-by-Step
The process is digital. While paper options exist, they are slower and less reliable.
You need to have your Property Tax Bill or the VHT Notice you received in the mail. You will need your 21-digit Assessment Roll Number and your Customer Number.
- Go to the official City of Toronto website.
- Navigate to the VHT portal.
- Enter your roll number and customer number.
- Select your status (Occupied by owner, Occupied by tenant, Vacant, or Exempt).
- Save the confirmation page.
It is vital that you save the confirmation. Print that page as a PDF or take a screenshot. That confirmation number is your only proof if the system has an error and tries to bill you later.
The Audit Trap
The City of Toronto audits declarations. They use a random selection process, but they also target specific declarations that look suspicious, such as a renovation exemption without a permit on file.
If you are audited, the burden of proof is on you. You are liable until proven exempt. You will need utility bills, lease agreements, drivers’ licenses showing the address, or insurance documents.
Keep your records for three years. It is tedious, but it is better than paying a significant tax bill.
Comparison: VHT vs. Federal UHT
Many people confuse the Toronto tax with the Federal Underused Housing Tax (UHT). They are different regulations.
The Toronto VHT applies only to Toronto properties. It targets all residential owners, imposes a 3% tax on the assessment value, and filing is mandatory for everyone.
The Federal UHT applies across Canada. It mostly targets foreign owners and corporations, imposes a 1% tax on value, and filing is only required for specific groups.
Beyond VHT: Smarter Financial Moves
Dealing with the VHT is essentially damage control. Real wealth is built through strategy.
If you are holding a vacant property, the carrying costs are high. Between property taxes, insurance, maintenance, and now the VHT, the costs add up quickly.
This is where you need to look at the bigger picture.
If your situation is complicated, such as holding property in a trust or being a non-resident, general advice might not be enough. You may need tax consultants in Toronto who understand the local municipal nuances. Specialists can help distinguish between a short-term rental and a vacant home in the eyes of the bylaws.
If you are saving money by legally avoiding the VHT, consider how to use that liquidity. Many savvy homeowners use those savings to maximize their contributions to a Tax-Free Savings Account (TFSA). The TFSA is the opposite of the VHT; while the tax takes your money, the TFSA allows it to grow without government taxation on the profits.
Holistic tax advice in Toronto often focuses on the tax you do not have to pay. If the property is sitting empty because you are waiting for the market to improve, do the math. The 3% tax likely consumes your appreciation. Renting it out, even at a break-even rate, protects you from the VHT.
Frequently Asked Questions
Can I claim my condo is occupied if I visit it on weekends? No. To be considered occupied, it must be the principal residence of the owner, or occupied by a tenant for at least six months of the year in periods of at least 30 days. Weekend visits do not count.
What if I forgot to declare by the deadline? File immediately. You will pay the late fee, but that is better than the City assuming it is vacant and sending you a massive tax bill. You have an appeal period, but it is difficult.
Does this apply to parking spots or lockers? Generally, no. The VHT applies to residential units. If the parking spot has a separate tax roll number and is not tied to a residence, check with a professional, but usually, it targets livable spaces.
I am in the hospital for long-term care. Do I pay? There is an exemption for owners who are in a hospital or long-term care facility. You can claim this exemption for up to two consecutive taxation years.
How do I dispute a VHT bill? If you get a Notice of Assessment for VHT that you believe is wrong, you must file a Notice of Complaint through the City’s portal. Do this quickly as there are strict time limits, usually 90 days.
The Bottom Line
The Vacant Home Tax is aggressive and designed to be noticeable.
For the 2026 filing season, the increase to a 3% rate means you cannot afford to be passive. Double-check your occupancy dates. Keep your utility bills organized. Set a reminder to get the declaration done before the end of February.
If you are unsure about your status, or if you hold multiple properties, do not guess. Seek out tax advice in downtown Toronto or from reputable firms. Paying for clarity is much cheaper than a 3% tax on a valuable asset. Stay organized, declare early, and protect your investment.