The Toronto Vacant Home Tax (VHT) rate increased to 3% of assessed value for the 2025 tax year (billed in 2026), and the City of Toronto issued more than 14,200 assessment notices in March 2026 — a 31% increase over the prior year. Every Toronto residential property owner must complete an annual declaration of occupancy status by February 28 each year or be deemed vacant and billed automatically. Ottawa's separate VHT remained at 1%, while Hamilton's pilot program launched January 1, 2026 at 1% with phased enforcement.
What changed in 2026
Toronto City Council tripled the VHT rate from 1% to 3% effective January 1, 2024, but the full revenue impact only materialized in the 2026 billing cycle because the tax is calculated retroactively against the prior year's occupancy. The 3% rate now applies to all properties deemed vacant for more than six months in calendar year 2025.
For context, a $1,250,000 assessed Toronto home now triggers $37,500 in annual VHT if deemed vacant — up from $12,500 under the 1% rate. The math has fundamentally changed the calculation for absentee owners, foreign-titled investors, and out-of-province inheritances. Many owners who tolerated the 1% as a cost of holding now face an unsustainable carrying cost.
Toronto also tightened the declaration process: false declarations now carry a minimum $10,000 penalty per occurrence plus retroactive VHT. The city's audit division added 22 staff in Q4 2025 and now uses hydro consumption data from Toronto Hydro, water usage from Toronto Water, and Canada Post address-change records to flag suspicious declarations.
Who is exempt from the Toronto VHT
Six categories of property escape VHT, but documentation requirements are strict. Every exemption must be supported by evidence and disclosed at declaration time.
Principal residence exemption
Any property that is the principal residence of the owner or the owner's family is exempt. "Principal residence" is defined as the property where the owner ordinarily resides for the longest period in a calendar year. Drivers' licences, healthcare cards, voter registration, and utility bills are all evidence the city will accept.
Tenanted property exemption
A property leased to an arm's-length tenant for at least six months in the year is exempt. The tenancy must be at fair market rent and supported by a registered Ontario Standard Lease Form 2229E, plus banking records showing rent received.
Court order, repair, and medical exemptions
Properties that are vacant due to a Landlord and Tenant Board (LTB) order, major renovation under a city building permit, or the owner's hospitalization or long-term care admission all qualify for exemption. The renovation exemption is capped at two consecutive years, after which the tax applies.
For a full exemption matrix, see our monthly market updates or chat with Ask Zara for help drafting your declaration.
How the VHT interacts with other taxes
The VHT stacks with several other Ontario and federal taxes. Owners need to understand the combined burden because some properties now face four overlapping taxes.
- Toronto VHT (3%): Local annual tax on vacant properties.
- Federal Underused Housing Tax (UHT): 1% federal tax applies to foreign and certain Canadian-owned properties left unused. Owned by Canada Revenue Agency.
- NRST (25%): One-time provincial tax on foreign purchase of residential property. Not annual.
- Speculation and Vacancy considerations: Ottawa and Hamilton VHT programs run separately at 1% each.
A foreign owner of a vacant $1.5M Toronto condo faces $45,000 of annual VHT plus $15,000 of UHT — total $60,000 per year, plus property tax of roughly $9,500. That's $69,500 of holding cost before any mortgage interest. This combined burden has driven a measurable wave of listings in Q1 2026, particularly in CityPlace, Liberty Village, and Yonge/Eglinton condo towers where investor ownership rates exceed 30%.
The Ottawa and Hamilton VHT programs
Ottawa's VHT launched January 1, 2024 at 1% of assessed value. Approximately 1,800 Ottawa properties were billed VHT in 2026. The Ottawa program uses the same declaration deadline (February 28) and exemption categories as Toronto, but the rate has not increased and council debate suggests it will hold at 1% through 2027.
Hamilton's VHT launched January 1, 2026 at 1%, with the first declaration deadline of February 28, 2027. RAHB estimates roughly 2,100 Hamilton properties will be flagged for review. Hamilton's program includes a unique exemption for short-term rental properties licensed under the city's STR bylaw, which exempts properties with at least 120 nights of documented rentals during the year.
Ottawa-Gatineau cross-border owners (Ontario residents with Quebec property and vice versa) face additional complexity because Quebec has no equivalent tax. Browse current Ottawa rental inventory through renting guides.
How to file the declaration without errors
The declaration is filed online through the City of Toronto MyTax portal. Owners need their 21-digit roll number from the property tax bill, plus supporting documents for any exemption claimed.
- Gather documents. Lease, hydro bills, drivers' licence, healthcare card, building permit.
- Login to MyTax. Use your Toronto Account credentials.
- Select status: Occupied as principal residence, occupied by permitted tenant, vacant with exemption, or vacant taxable.
- Upload supporting evidence. Maximum file size 4MB per document.
- Submit before February 28. Late declarations face $250 penalty.
- Print confirmation. Retain for seven years per CRA records-retention guidance.
If you own multiple properties, each requires a separate declaration. Co-owned properties only require one declaration but require all owners to consent. Estate properties under probate need executor-signed declarations with the probate certificate uploaded.
What sellers and landlords need to know
If you're listing a Toronto property that has triggered VHT, the assessed amount becomes a closing-cost liability that flows through your statement of adjustments. Buyers' lawyers now routinely request a VHT clearance certificate from the City of Toronto before closing, and missing certificates can delay closings by 5-10 business days.
Landlords should ensure every Ontario Standard Lease Form 2229E is registered, banked, and dated to support occupancy proof. Tenants paying rent in cash should switch to e-transfer or pre-authorized debit immediately to create the paper trail. See our For Landlords resource or use Manage Rentals to centralize lease documentation. Sellers should also consider a free instant home valuation to model whether the holding cost still makes sense given recent appreciation.
Frequently asked questions
What counts as "vacant" under the Toronto VHT?
A property is considered vacant if it was unoccupied for more than six months in the calendar year, unless it qualifies for one of the six exemptions. "Unoccupied" means no person used the property as their principal residence and no tenant occupied under a lease. Short stays by friends or family, vacation use by the owner, and intermittent Airbnb rentals all count as vacant unless you can prove cumulative occupancy exceeds 184 days. Hydro and water consumption are the primary data sources the city uses for audit.
What happens if I forget to file my declaration?
If you miss the February 28 deadline, your property is automatically deemed vacant and the 3% VHT is billed in May along with your property tax. You can still file a late declaration with supporting evidence to dispute the deemed-vacant status, but the late penalty of $250 applies and the city may demand additional audit-level proof. Roughly 18% of 2026 VHT bills were issued to owners who simply forgot — the city's appeal success rate for late filers is around 64%, but it requires substantial documentation.
Does VHT apply to short-term rentals?
A short-term rental does not satisfy the tenanted property exemption in Toronto because the city requires a lease of at least six months at fair market rent. STR-only properties are therefore considered vacant for VHT purposes unless the owner also occupies as principal residence. Hamilton's VHT program is the exception — it includes a specific exemption for STR properties licensed under the city's STR bylaw with at least 120 documented rental nights per year. Toronto STR operators should plan accordingly or restructure.
How does VHT interact with the federal Underused Housing Tax?
The two taxes apply independently and can stack on the same property. The UHT is a 1% federal tax filed annually with CRA on form UHT-2900, primarily targeting foreign owners and certain Canadian holding-company ownership structures. The Toronto VHT is a 3% municipal tax with separate exemption rules. A foreign owner of a vacant Toronto property faces both taxes for combined 4% annual carrying cost on top of property tax. Most Canadian individual owners are exempt from UHT but must still file the form.
Can I appeal a VHT assessment?
Yes. Appeals must be filed within 90 days of the notice of assessment using Form 1 — Notice of Complaint. The Vacant Home Tax Complaints Process is administered by Toronto's Revenue Services and reviewed by an independent panel. Successful appeals typically involve proof of principal residence (utility bills, drivers' licence, voter registration), proof of qualifying tenancy (Standard Lease Form, bank statements), or proof of repair/renovation activity (building permits, contractor invoices). Roughly 41% of 2026 appeals succeeded in full or partial reversal.
Will the VHT keep rising?
City Council debated a 5% rate in late 2025 but settled on holding at 3% through 2027, with a mandatory review in Q3 2027. The political consensus has shifted from "discourage vacancy" to "raise revenue" as the VHT now produces roughly $87 million annually, making rate cuts politically difficult. Owners should plan as if the 3% rate is permanent and budget accordingly. Ottawa's VHT review is scheduled for 2028 and Hamilton's first review is 2030.
Key takeaways
- Toronto VHT is now 3%. A $1.25M home pays $37,500 per year if vacant.
- File by February 28. Missed declarations are deemed vacant automatically.
- Six exemptions exist. Principal residence, tenanted, court order, repair, medical, recent purchase.
- Hamilton VHT launched January 1, 2026. First declaration due February 28, 2027.
- UHT stacks federally. Foreign owners pay 4% combined annual carrying cost.
- Hydro and water data drive audits. The city now cross-references consumption automatically.
