Starting in 2025, the City of Hamilton will introduce a Vacant Unit Tax (VUT) aimed at reducing the number of unoccupied residential properties. Similar to programs in cities like Vancouver, Toronto, and Ottawa, this initiative seeks to address housing shortages and fund essential housing programs.
What is the Vacant Unit Tax?
The VUT requires all residential property owners in Hamilton to submit an annual occupancy declaration, beginning in January 2025. This declaration determines whether a property has been vacant for more than 183 days during the previous calendar year.
Properties identified as vacant without qualifying for an exemption will be subject to a tax equal to 1% of the property’s assessed value. For instance, a home valued at $500,000 would incur a $5,000 tax if it remained unoccupied for most of the year.
Failing to submit the occupancy declaration by the March 31, 2025 deadline will result in the property being classified as vacant, and the tax will automatically apply. Additionally, late submissions will incur a $250 late fee, along with penalties of 1.25% on the first day of default and 1.25% monthly interest on unpaid taxes.
Exemptions to the Vacant Unit Tax
Certain circumstances allow for exemptions to the VUT, including:
Deceased Owners: Properties owned by someone who passed away are exempt for the year of death and the following year.
Major Renovations: If a property is uninhabitable for more than 183 days in a year due to approved renovations, it qualifies for an exemption.
Property Sales: Homes sold during the year to unrelated buyers are exempt.
Institutionalization: Properties owned by individuals residing in long-term care facilities or other institutions for extended periods are exempt.
Court Orders: Properties under court orders prohibiting occupancy are exempt.
Non-Profit Housing: Units owned and operated by designated non-profit housing organizations are not subject to the tax.
Ensuring Compliance: Annual Audits
To ensure accuracy and compliance, the City of Hamilton will conduct annual audits. These audits will target:
Properties claiming exemptions.
Those with changes in occupancy status.
Properties flagged through complaints or selected for random checks.
If a property is deemed vacant after an audit, the tax will apply retroactively.
How the Tax Will Be Collected
The Vacant Unit Tax will be added to the Final Property Tax Bill, issued in June each year. For 2025, the tax will reflect the occupancy status of properties in 2024.
Property owners will need to pay in two installments:
First installment deadline: June 30, 2025.
Second installment deadline: September 30, 2025.
Revenue generated from the VUT will support housing initiatives such as building affordable housing units, assisting non-profit housing organizations, funding rent subsidies, and providing homelessness outreach programs.
Key Dates to Remember
December 2024: Property owners receive declaration instructions.
March 31, 2025: Deadline to submit occupancy declarations.
April 2025: Late declarations accepted with fees.
June 2025: Vacant Unit Tax charges added to property tax bills.
By implementing this tax, Hamilton joins other cities in tackling housing shortages and supporting a more sustainable housing market. Property owners are encouraged to familiarize themselves with the requirements and exemptions to ensure compliance and avoid unnecessary charges.
