LAU: Toronto’s empty home tax a punitive policy that doesn’t even work

As long as people acquire homes legally, they should be free to use them however they want

Published May 01, 2026  •  Last updated 2 hours ago  •  3 minute read

Toronto Mayor Olivia Chow’s tax-the-rich plan raises taxes beyond luxury homes and won’t address Toronto’s growing financial crisis, writes columnist Brian Lilley. Photo by Jack Boland /Toronto Sun

In The Adventure of the Empty House, Sherlock Holmes, thought to be dead, re-emerges in London to solve a murder by catching the killer in an empty house across the street from his Baker Street flat.

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In the much less exciting Misadventure of the Empty House Tax (more precisely, the Vacant Home Tax), City Hall taxes Torontonians for 3% of their property’s assessed value unless they or a tenant occupied the property for at least six months of the taxation year. To avoid penalty, residents must have declared by April 30 that their home is not vacant.

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Some quick history. Beginning in 2022, the City of Toronto began charging a 1% vacant property tax. In the fall of 2023, City Council voted 21-2 to raise the tax rate to 3%, effective in 2024.

Mayor Olivia Chow supported tripling the tax and said, “No one should be keeping a home empty during this housing crisis.”

While Councillor Stephen Holyday moved to cancel the tax and Councillor Brad Bradford moved to pause the tax in 2024, they were voted down 4-19 and 5-18, respectively. Thus, the tax remains.

Simply put, the Vacant Home Tax is awful policy. First, people’s homes are private property, not public assets. As long as people acquire homes legally, they should be free to use them however they want – live in it, rent it out, let relatives stay in it, or leave it empty. It should be their choice – it’s their property, not the government’s.

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Consider this: cars are also expensive and some Torontonians would like a car but cannot afford one. But no one thinks we should have a “vacant car tax” to effectively redistribute cars from people who own them (but rarely drive) to people who might drive more often.

Car owners have the right to drive, store, loan or even smash their cars. Government shouldn’t penalize people who own cars but do not drive them, so why should government penalize people who own homes but do not live in them for at least six months of the year?

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Moreover, as economist Jack Mintz has argued, vacant home taxes in the long run “could well lower the housing stock, since developers paying the tax on land inventory will be discouraged from investing in residential property.”

Even in the short run, Mintz noted, vacancy taxes have an almost negligible effect on housing supply. In Vancouver, vacancies fell by only 0.19% of the overall rental stock after the city introduced a vacant home tax.

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In reality, many people have good reasons to leave their homes empty for six months of the year. A family might be out for more than six months while renovations take place. Or a family that moves might take more than six months to sell their old home in a sluggish housing market – for them, a vacant house tax is effectively a tax on their mobility.

Others may be absent for more than half the year if they fall severely ill. And so on.

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Of course, just like in other parts of Canada, affordability is a major issue in the city.

But instead of a punitive tax, Toronto’s mayor and council should consider other ways to improve housing affordability, such as helping to reduce approval times and development fees.

In Toronto, homebuilders wait more than two years for municipal approvals – more than three times the wait time in Vancouver. And new highrise developments pay municipal charges more than three times what they are in Ottawa. Longer approval times and higher development charges push prices up for homebuyers.

Trying to improve affordability and livability with a tax is the wrong approach. City hall should bring its misadventure with empty house taxes to an end.

– Matthew Lau is an adjunct scholar at the Fraser Institute

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