Toronto’s Vacant Home Tax vs. the Federal Underused Housing Tax: What GTA Landlords Actually Owe in 2026
Quick answer: As of 2026, GTA landlords generally owe only one vacant-property tax, not two. Toronto’s municipal Vacant Home Tax (VHT) is still very much in force — 3% of a property’s Current Value Assessment for properties vacant six months or more, declared annually — but the federal Underused Housing Tax (UHT) was effectively ended by Bill C-15 (Royal Assent March 26, 2026), which stopped the tax from applying for the 2025 calendar year onward. Filing and payment obligations for 2022–2024 UHT years still stand; there’s simply nothing new to file federally from 2025 forward.
Key facts — Toronto VHT vs. the federal UHT in 2026
- Toronto’s Vacant Home Tax (VHT): 3% of Current Value Assessment, on properties vacant 6+ months in the taxation year, since the 2024 tax year
- VHT is a municipal tax — separate legislation, separate declaration portal, separate penalties from any federal regime
- Federal Underused Housing Tax (UHT) was 1% of assessed value, but Bill C-15 (Royal Assent March 26, 2026) ended it for the 2025 and later calendar years
- UHT filing/payment obligations for 2022, 2023, and 2024 calendar years remain fully in effect and are not forgiven
- Every Toronto residential property owner must still file a VHT occupancy declaration every year, even if they live there — failure to declare defaults the property to “vacant”
- False VHT declarations or missed information requests: fine of up to $10,000, plus the tax itself
Do I Still Owe the Federal Underused Housing Tax in 2026?
For most owners, no — and this is the single most out-of-date piece of information still circulating in landlord forums and older blog posts. Bill C-15, the Budget 2025 Implementation Act, received Royal Assent on March 26, 2026. Division 2 of Part 3 of that bill amended the Underused Housing Tax Act to end the tax in respect of the 2025 and all future calendar years, and sets up the eventual repeal of the Act itself. As a direct result, there is no requirement to file a UHT return or pay the tax for 2025 and subsequent calendar years.
That relief is not retroactive, though. Filing, payment, and penalty obligations for the 2022, 2023, and 2024 calendar years remain fully in effect. If you owned an affected property in one of those years and never filed, that exposure doesn’t disappear just because the tax has since ended going forward.
Does Toronto’s Vacant Home Tax Still Apply?
Yes, entirely unaffected by the federal change. The Vacant Home Tax is a City of Toronto program, authorized under the City of Toronto Act, 2006, and it has nothing to do with the federal Underused Housing Tax beyond both taxing vacant residential property. Since the 2024 taxation year, the VHT rate has been 3% of a property’s Current Value Assessment, applied when a residential property was vacant for six months or more in the taxation year and no exemption applies.
Every residential property owner in Toronto must submit an occupancy declaration every year — even owners who live in the property full-time and clearly owe nothing. Miss the declaration deadline and the City assumes the property was vacant, issues a Notice of Assessment (a VHT bill), and puts the burden on you to dispute it after the fact.
What’s Actually Different Between the Two Taxes?
| Feature | Toronto Vacant Home Tax | Federal Underused Housing Tax |
|---|---|---|
| Status in 2026 | Active | Ended for 2025+ (Bill C-15) |
| Governing authority | City of Toronto (municipal) | Government of Canada (federal) |
| Rate (while active) | 3% of Current Value Assessment | 1% of assessed value |
| Who files | All Toronto residential owners (annual declaration) | Mostly non-Canadian owners, plus some Canadian corporations, partners, and trustees |
| Outstanding exposure | Ongoing — annual obligation | 2022–2024 years only |
Who Was Affected by the UHT That No Longer Needs to Worry?
The UHT was aimed primarily at non-resident, non-Canadian owners of Canadian residential property, but it also swept in some Canadian owners — certain partners in partnerships, trustees of trusts, and private corporations — who didn’t qualify as “excluded owners.” Those owners had to file an annual return even in years they owed nothing. With the tax ended for 2025 onward, that annual filing obligation is gone going forward for everyone, Canadian or not — but it’s worth double-checking whether your specific ownership structure had any open 2022–2024 filings that were never completed, since CRA can still assess and penalize those years.
What Exemptions Apply to Toronto’s Vacant Home Tax?
The City recognizes a defined list of exemptions, each requiring supporting documentation: death of a registered owner (up to three consecutive years), the principal resident being in care, active repairs or renovations under permit, a full transfer of legal ownership within the taxation year, occupancy required for full-time employment outside the GTA, a court order prohibiting occupancy, newly constructed unsold inventory (developers, up to two years), and a secondary residence required for medical reasons where the principal residence is outside the GTA. Snowbirds and owners away for work or medical reasons generally keep “occupied” status without needing a formal exemption, as long as the property remains their genuine principal residence.
What Should GTA Landlords Actually Do in 2026?
- Keep filing your Toronto VHT declaration every year — this obligation has not changed and the penalty for a missed or false declaration reaches $10,000.
- Stop budgeting for a federal UHT filing or payment for 2025 and later years — for most owners it no longer applies.
- Check whether your ownership structure has an unresolved 2022–2024 UHT filing — that exposure is not forgiven by the repeal.
- Corporate and trust-held properties should still confirm their VHT declaration is being filed correctly under the owning entity’s name, since the VHT’s declaration and exemption rules don’t distinguish ownership structure the way the old UHT did.
Frequently Asked Questions
Is the federal Underused Housing Tax still in effect in 2026?
No, not going forward. Bill C-15 received Royal Assent on March 26, 2026 and ended the Underused Housing Tax for the 2025 calendar year and all subsequent years. Filing and payment obligations for 2022, 2023, and 2024 remain in effect.
Do I still need to declare my Toronto property’s occupancy status every year?
Yes. Toronto’s Vacant Home Tax requires every residential property owner to submit an annual occupancy declaration, regardless of whether the property is occupied, exempt, or vacant. A missed declaration defaults the property to “vacant” and triggers a tax bill.
What is the current Toronto Vacant Home Tax rate?
3% of a property’s Current Value Assessment, in effect since the 2024 taxation year, applied to residential properties vacant for six months or more without an eligible exemption.
If I already paid federal UHT for 2022–2024, can I get it back?
The Bill C-15 changes end the tax for 2025 onward; they do not retroactively cancel obligations for the 2022, 2023, and 2024 calendar years. Speak with a CPA about your specific filing history before assuming any past liability is affected.
Are Toronto’s Vacant Home Tax and the federal Underused Housing Tax the same thing?
No. They were always two entirely separate regimes with different rates, different filing systems, and different governing authorities — a municipal tax and a federal tax. The confusion between them is common, but as of 2026 only the municipal Toronto VHT remains active.
Sources: Canada.ca — Underused Housing Tax, what has changed · City of Toronto — Vacant Home Tax · City of Toronto Act, 2006
Reviewed by Bader A. Chowdry, CPA, CA, LPA on August 18, 2026.
Important — informational only, not advice. Do not use this article to make any decision.
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