New Hamilton Vacant Unit Tax: Mandatory Occupancy Declarations to Be Submitted Starting January 2025
The City of Hamilton will roll out a Vacant Unit Tax (VUT) starting in 2025. This tax, modelled after similar programs in cities like Vancouver, Toronto, and Ottawa, aims to discourage property owners from keeping residential units unoccupied for extended periods. The tax is part of a broader initiative to make more housing available and support the city’s housing programs.
What the Vacant Unit Tax Means for Property Owners
Under the new policy, all residential property owners in Hamilton must submit an annual mandatory occupancy declaration, beginning January 2025. The declaration will confirm whether a property has been occupied or vacant for more than 183 days in the previous calendar year.
Properties deemed vacant without meeting exemption criteria will be subject to an additional tax of 1% of the property’s assessed value. For example, a property valued at $500,000 would incur a $5,000 tax if left vacant for the majority of the year.
Failure to submit the declaration by the March 31, 2025, deadline will result in the property automatically being classified as vacant, triggering the tax. Late declarations and non-declarations will incur $250 late fees, and penalties of 1.25% on the first day of default, plus 1.25% interest per month, will apply to unpaid taxes.
Exemptions to the Vacant Unit Tax
Certain properties may qualify for exemptions from the Vacant Unit Tax if specific conditions are met. An exemption will apply in cases where the owner has passed away, covering the year of the owner’s death and one additional year. Properties undergoing major renovations may also qualify for an exemption if a building permit has been issued and the unit is uninhabitable for more than 183 days within a calendar year.
Additionally, a property is exempt during the year of its sale, provided the transfer is to an unrelated party. Exemptions are also available for properties where the principal resident has been institutionalized or resides in long-term care for an extended period. Properties subject to court orders prohibiting occupancy are also exempt. Lastly, residential units owned and operated by designated non-profit housing organizations are not subject to the tax.
Audits
Audits will be conducted annually to ensure compliance, focusing on properties claiming exemptions, those with changing occupancy status, or those flagged through complaints or random checks. Properties identified as vacant after an audit will be charged the tax retroactively.
How the Vacant Unit Tax Will Be Collected
The VUT will be added to the Final Property Tax Bill, issued in June each year. For 2025, the tax will be based on occupancy status during 2024. Payments will be due in two installments, with the first payment deadline on June 30, 2025, and the second on September 30, 2025.
Revenue from the Vacant Unit Tax will be reinvested into Hamilton’s housing programs. These include investments in affordable housing units, support for non-profit housing providers, rent subsidies, and homelessness outreach.
Key Dates
Important dates for the new VUT are:
December 2024: Property owners will receive declaration instructions.
March 31, 2025: Declaration submission deadline.
April 2025: Late declarations accepted with a fee.
June 2025: VUT charges added to tax bills.
More information on the City of Hamilton’s new vacant unit tax can be found on their website.