Toronto’s Vacant Home Tax: Bills Are Due, and Audits Are Getting Stricter

If you own a home in Toronto that you do not live in full time, this is the season to pay attention. The 2025 Vacant Home Tax (VHT) notices went out in June 2026, and payment is due in three instalments on September 15, October 15, and November 16, 2026. At the same time, the City’s audits have become more thorough this year. And if you heard that the federal underused housing tax was scrapped and assumed every vacancy tax is now gone, that is only half the story. Here is where things stand as of August 2026.

The Toronto Vacant Home Tax has not gone away

The tax is 3 percent of a home’s Current Value Assessment. It was 1 percent when the program began in 2022 and rose to 3 percent for the 2024 tax year. A home that sits empty for six months or more in a year is taxed. A home you live in, a home with a tenant (a written lease of at least 30 days, for at least six months in the year), or a home that qualifies for an exemption is not taxed.

The part owners most often miss is the declaration. Even if you live in the home, and even if you qualify for an exemption, you have to declare the occupancy status every year. If you do not declare, the City treats the home as vacant and bills the tax. For 2025, the declaration deadline (April 30) has passed and the portal is closed, notices went out in June, and payment is due in the three instalments above, with any dispute to be filed by December 31, 2026. A false declaration, or failing to provide information when asked, can bring a fine of up to $10,000 on top of the tax.

Audits are getting stricter

In 2026 the City has taken a harder look at occupancy claims. If your property is selected for audit, you may be asked to prove that someone actually lived there, with documents such as utility bills, a lease, government identification showing the address, or income tax notices of assessment for the address. A home declared as occupied but with little sign of real use can draw questions. It is worth keeping these records for at least three years, which is the retention period the City expects.

The federal tax is gone, but only going forward

Separately, the federal Underused Housing Tax (UHT) was eliminated in Budget 2025. From 2025 onward there is no UHT to pay and no UHT return to file. What many people miss is that the change starts in 2025. For the 2022, 2023, and 2024 years, the filing and payment obligations still stand, and so do the penalties and interest for missing them. The UHT mainly applied to non-resident and foreign owners, so if that describes you, it is worth confirming that those three years are settled before you set the topic aside.

When you buy or sell, the tax follows the home

The Vacant Home Tax attaches to the property, much like property tax. If a previous owner did not declare or pay, the amount can become the new owner’s problem after closing. A seller should hand the buyer a copy of the filed declaration, and a buyer should confirm that the declaration and payment are in order before closing.

Owners who live abroad and keep a Toronto home for family or as an investment are the most likely to miss the yearly declaration. A single missed year can turn into a 3 percent bill on a home that was never truly empty, so it helps to track the deadline every year.

What makes Jenna Lee Law different

At Jenna Lee Law, a principal lawyer who is also a CPA handles the legal side of a property transaction and the tax that comes with it, in one place. Reviewing the Vacant Home Tax declaration, any past UHT years, and the tax attached to a sale together helps you avoid a bill or penalty that shows up later. For owners who hold property in Toronto while living abroad, checking the legal and tax side at the same time is what keeps surprises off the closing table.