Is someone living in your house?

The City of Hamilton (the “City”) has implemented a Vacant Unit Tax (“VUT”) as part of its efforts to address the Canadian housing crisis and reduce the number of vacant residential units.

By April 30, 2025, all homeowners in the City of Hamilton must complete a declaration on the City’s website to confirm whether their home is vacant or not. Homeowners who fail to complete the declaration by the due date will be subject to fines and penalties.

The VUT is an annual tax imposed on homeowners of residential properties that are vacant for six months or more in a calendar year. The goal is to deter speculative property holding and increase the availability of housing by encouraging homeowners to either occupy their properties or rent them out.

The VUT approved by the City of Hamilton is part of a broader housing strategy, following in a similar way as other Canadian cities, like Toronto and Vancouver.

1. Applicability: The VUT will apply to every residential unit that was vacant in the prior calendar year for at least six months or more. This means that if your home was unoccupied for a total of six months or more in 2024, then you will be subject to the tax.
2. Occupancy requirement: A residential unit is not considered vacant so long as the owner or a tenant resides at the property. If a tenant is renting the home, the owner must have entered into a valid lease with the tenant for a period of 30 days or more.
3. Declaration deadline: A residential unit will be deemed to be a vacant unit if the owner does not complete the declaration by the April 30th deadline. This means you can’t ignore it; if you do not complete the declaration by April 30th, you will be subject to the VUT.
4. Tax rate: Any residential unit that is vacant or deemed to be vacant will be subject to a 1% tax on the current value assessment of the property. The current value assessment can be found on the Property Assessment Notice issued by the Municipal Property Assessment Corporation (also known as “MPAC”).
5. Initial and future declaration: For the initial declaration to be filed for the 2024 calendar year, homeowners have until April 30, 2025 to complete and submit their declaration. However, the deadline to submit the declaration will change after the first year.

A homeowner may be exempt from paying the VUT if one of the following exemptions apply to their circumstance:

1. Principal residence: the home is the principal residence of the owner. This is the home that you and your family live in, and it is designated as your principal place of residence with the Canada Revenue Agency.
2. Death of an owner: the home was unoccupied because of the death of the owner during the previous year or the one year after the owner’s death.
3. Major renovations: the home is being repaired or renovated which prevents the home from being occupied, but all necessary permits have been issued for the repairs or renovations. At this time, the by-law is silent as to if this exemption applies to homeowners who have submitted an application for a repair or renovation permit, but the permit has not yet been issued by the City.
4. Sale of the property: the home was sold during the calendar year. Either the purchaser or the seller of the home can submit a declaration. As a purchaser, you should request a copy of the filed declaration prior to closing the transaction.
5. Resident in a care facility: the occupant of the home (either the owner or the tenant) was in the hospital or a long-term care facility for an aggregate of at least six months during the previous year.
6. Court order: an existing court order prevents the home from being occupied for 6 months or more.
7. Non-profit housing unit: the home is a “designated housing project” or the home is owned by a not-for-profit whose primary objective is to provide housing.

Each exemption has a specific set of requirements which must be met, and documented proof will be required for the exemption to apply. If the exemption does apply, then the homeowner will not be required to pay the tax.

If a unit was vacant, in the aggregate, for at least six months or more, or if a homeowner does not complete the declaration by the April 30, 2025 deadline, they will be subject to the VUT.

The VUT is currently set to 1% of the currently assessed value of the property.

This will be added to the homeowners’ final property tax bill which is typically issued in June. Once applied to the property tax bill, any unpaid VUT tax will accrue interest on a monthly basis.

A homeowner who objects to the VUT being assessed against their property may file an appeal with the City. There are only a certain number of grounds for which an appeal can be filed. These grounds are:

• The VUT was incorrectly assessed due to an error by the homeowner in completing the declaration
• The VUT was incorrectly assessed due to an error by the City in the assessment or calculation of the VUT
• The VUT was assessed due to the homeowner not completing the declaration by the late cut-off deadline and as a result the home was deemed to be a vacant unit even though the home was not vacant

For the initial appeal, a homeowner must file a Notice of Claim within 60 days of the VUT being assessed against the property. This means the 60 day clock starts running once the VUT is applied to the June tax bill. The Notice of Claim must state the grounds for the appeal and provide any supporting documentation.

The City has 60 days to respond to the homeowner’s appeal. Once a decision is issued and if the homeowner still disagrees with the assessed VUT, the homeowner may then file an appeal with the Director of Financial Planning, Administration, and Policy (“Director”) at the City. The appeal with the Director must be filed within 60 days of receiving the initial decision from the City.

On appeal with the Director, the homeowner needs to state why they disagree with the initial decision and provide any additional information or documentation which supports their claim.

When challenging the VUT to the Director, the homeowner cannot change the grounds of their objection. For example, if the homeowner initially claims that they made a mistake when completing the declaration, the homeowner is not permitted to then claim that the VUT was incorrectly assessed due to an error by the City.

A homeowner who wants to challenge the assessed VUT should carefully consider the grounds for appeal from the outset and pay close attention to any deadlines for when appeals must be filed.

Whether it is for an exemption or in challenging the VUT, it is highly recommended that homeowners collect and save all relevant documentation ahead of time.