As housing affordability comes under increasing pressure, governments at every level have turned their attention to vacant properties as a potential contributor to housing shortages.
Canada now levies multiple taxes on vacant or underused housing at the federal, provincial, and municipal levels. For property owners, investors, and tax professionals, navigating the growing patchwork of vacancy tax obligations nationwide can be a complex and challenging process.
To provide some clarity, this comprehensive guide summarizes Canada’s various vacant home taxes and their associated requirements, including current rates, filing obligations, deadlines, and penalties.
Federal: Underused Housing Tax (UHT)
Rates and Key Details: The federal UHT imposes a 1% annual tax on residential property owned by affected owners that remains unoccupied for more than six months of the year. An “affected owner” generally refers to foreign nationals or non-resident entities, such as partnerships, trusts, or corporations that are held in part by foreign nationals. Most Canadian citizens or permanent residents are excluded.
Filing Requirements: Affected owners must file separate UHT returns for every residential property in Canada they own as of December 31 of the given tax year, even if an exemption applies or no tax is due. In the case of co-ownership, each co-owner must file individually for the same property.
Deadlines and Penalties: UHT returns for the given year must be submitted by April 30 of the following year. Any tax owing must also be paid by this date. Failing to file on time incurs a federal penalty of $1,000 for individuals or $2,000 for corporations. Unpaid tax also accrues interest at the prescribed rate.
Toronto: Vacant Home Tax (VHT)
Rates and Key Details: Toronto’s VHT, effective for 2022 onward, imposes a 3% tax on homes in the Greater Toronto Area that are vacant for at least six months per year.
Filing Requirements: Every residential property owner in Toronto is required to declare annually whether their home is occupied or vacant. Principal residences and rented units are exempt from the 3% tax, but owners must still file a declaration to claim the exemption.
Deadlines and Penalties: Declarations for the prior calendar year must be submitted by April 30 of the following year. If a declaration is not filed by the deadline, the City presumes the property is vacant and issues a VHT bill accordingly. After declarations close, the City issues tax notices, and payments are then made in three installments: typically in September, October and November of the same year. Late VHT installment payments incur interest at a rate of 1.25% per month, and Toronto’s bylaws allow fines up to $10,000 for willfully false or misleading declarations.
Ottawa: Vacant Unit Tax (VUT)
Rates and Key Details: Ottawa’s VUT began in 2022. The base tax rate is 1% of assessed value for a vacant unit’s first year, increasing by 1% for each consecutive vacant year, up to a maximum of 5%. Vacant units are those deemed unoccupied for an aggregate of more than 184 days in a calendar year.
Filing Requirements: Similar to Toronto’s VHT, all owners of residential units in Ottawa (properties taxed as residential with six units or fewer) are required to declare their occupancy annually. Even exempt properties (like a primary residence) require a declaration to confirm status.
Deadlines and Penalties: Declarations for each property must be filed by the third Thursday of March. For example, owners received notices in January 2025 and had until March 20, 2025, to declare their 2024 status. The VUT is then added to the final tax bill (usually the June property tax bill). A $250 fee is charged for late declarations submitted by April 30. If an owner fails to declare by the deadline, the city treats the property as vacant and levies the VUT on the tax bill. Unpaid VUT incurs a monthly interest charge of 1.25%.
Hamilton: Vacant Unit Tax (VUT)
Rates and Key Details: Hamilton’s VUT took effect for the 2024 year and levies a 1% tax on the assessed value of residential units that are deemed vacant for more than 183 days in the year.
Filing Requirements: All owners of qualifying residential units (up to 6 units per property code) must submit an annual occupancy declaration. As with Ottawa’s VUT, principal residences are exempt from the tax, but their status must still be declared annually.
Deadlines: Declarations open in early February, with a deadline of April 30. Notices are mailed by late winter to all owners with residential units, reminding them of the deadline. The VUT is added to the final property tax bill (June) once declarations are processed. A $250 fee applies to late declarations (this fee was waived for 2025 due to postal delays). Any unit not declared on time is deemed vacant, and the tax is applied at a rate of 1%. Unpaid VUT incurs a monthly interest charge of 1.25%.
Windsor: Vacant Home Tax (VHT)
Rates and Key Details: Windsor introduced its Vacant Home Tax in 2024. Residential properties left vacant for 183 days or more in a given year are subject to a 3% levy.
Filing Requirements: Windsor’s program is complaint-driven, meaning not all property owners are required to complete a mandatory declaration of occupancy status. Instead, owners of homes suspected to be unoccupied will receive a request from the City to fill out an occupancy declaration form.
Deadlines and Penalties: Declaration forms must be completed and returned within 30 days of receiving the City’s request. If no declaration or proof of exemption is provided by the stated deadline, the City presumes vacancy and issues the tax. Where the VHT is applicable, owners will receive a bill from the City that must be paid within 90 days of receipt. Unpaid VHT incurs a monthly interest charge at a rate of 1.25%.
Sault Ste. Marie: Vacant Unit Tax (VUT)
Rates and Key Details – Sault Ste. Marie officially launched its Vacant Unit Tax in 2024. A 4% tax is applied to residential properties that are vacant for more than 183 days in a calendar year.
Filing Requirements – Like Windsor, Sault Ste. Marie has implemented a complaint-driven process, with anyone able to submit a tip to the City. Owners of homes suspected to be unoccupied will receive a request from the City to fill out an occupancy declaration form.
Deadlines and Penalties: Declaration forms must be completed and returned within 30 days of receiving the City’s request. Where the VUT is applicable, owners will receive a bill from the City that must be paid within 90 days of receipt. Unpaid VUT incurs a monthly interest charge at a rate of 1.25%.
British Columbia: Speculation and Vacancy Tax (SVT)
Rates and Key Details: Currently, the B.C. Speculation and Vacancy Tax rate is 2% for foreign owners or “untaxed worldwide” earners, and 0.5% for Canadian citizens and permanent residents with domestic income (although this rate is proposed to increase in 2026). Rates are applied to the property’s assessed value as of Dec. 31.
Filing Requirements: Owners of residential property in designated taxable areas of B.C., including Metro Vancouver suburbs, the Fraser Valley and Kelowna, must submit an annual SVT declaration each year, even if they are exempt. Each co-owner on the title (including family members or spouses) must file separately.
Deadlines and Penalties: Declarations are due March 31 each year, and if any SVT is owing, payment is due by the first business day in July of the same year. If no declaration is filed by the deadline, the full tax is immediately levied at the top rate (2% of assessed value) with no exemption allowed. A 10% penalty and interest are added to any balance unpaid after the July due date.
Vancouver: Empty Homes Tax (EHT)
Rates and Key Details: Implemented in 2017, Vancouver’s EHT applies to homes vacant for six months or more in a year. For 2024, the EHT was 3% of the property’s assessed taxable value.
Filing Requirements: All Vancouver homeowners must declare annually whether their property was occupied or empty. Only one declaration is required per property (unlike the provincial SVT).
Deadlines and Penalties: Occupancy declarations for 2024 were due on February 4, 2025, with a payment deadline of April 14. Vancouver has also provided late-filing windows, allowing the deadline to be extended (via an administrative request) up to five years after the vacancy year. If a homeowner fails to file a declaration, the city issues a $250 bylaw ticket and treats the property as vacant, applying the 3% tax. Unpaid EHT incurs a 5% penalty (on the unpaid balance), and monthly interest is applied to arrears.
Common Exemptions to Canada’s Vacant Home Taxes
While vacant home taxes can add thousands of dollars to the annual cost of ownership, most properties are eligible for exemptions if they meet certain conditions. Although rules vary by jurisdiction, the following exemptions are generally provided under most federal, provincial and municipal programs:
Principal Residence – A property used as the owner’s principal place of residence for the majority of the year is typically exempt from all vacant home taxes. This is the most common exemption across the various vacant home taxes. It’s important to note that a declaration is still typically required to claim the exemption, even if no tax is due.
Long-Term Rental (Arm’s Length Tenants) – Homes rented to unrelated third-party tenants may qualify for an exemption. Each city defines minimum lease terms and documentation standards.
Recent Change in Ownership – If the property was sold within the tax year, most jurisdictions allow an exemption. Ownership transfer must be complete (registered on title) and typically cannot be between related parties.
Renovations or Construction – Substantial renovations or construction work that prevents occupation of the home may trigger an exemption. This exemption usually applies for one tax year only and may require additional evidence.
Owner’s Death or Estate Settlement – If the registered owner passed away, most vacant home tax regimes grant an exemption for at least one year following the death. In some cases, estate executors can apply for extensions while the home is being sold or transferred.
Medical or Institutional Absence – Temporary vacancy due to the owner’s hospitalization, long-term care, or similar medical or institutional reasons may qualify for relief. This exemption is often capped (e.g. once every 10 years in Vancouver) and may require medical documentation.
Uninhabitable Due to Disaster or Hazard – If the property becomes uninhabitable due to a fire, flood, or similar hazard, owners may qualify for exemption by submitting evidence of the event and the repair timeline.
Final Thoughts
For Canadian taxpayers, the landscape of vacant home taxes in 2025 requires careful attention. As new intermediaries, such as municipal tax bodies, align their policies with federal objectives, staying updated on changes will remain critical. A property owner may need to comply with both the federal UHT and separate provincial or municipal declarations. These requirements are distinct – exemption under one jurisdiction does not automatically confer exemption in another.
Penalties for missed deadlines can be significant, so early organization of paperwork and property tax details is essential. For those managing multiple properties or operating under complex ownership structures, consulting with a professional CPA can provide clarity and ensure optimal compliance with these evolving tax requirements. With clear guidelines and proactive planning, taxpayers can effectively manage their obligations while contributing to initiatives that aim to make housing more accessible for everyone.
This article was written by the NVS Professional Corporation team, your knowledgeable Barrie and Markham accountants. The content is intended as a general guide for informational purposes only. For specialist advice tailored to your specific situation, please reach out to our expert team.
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