Legal Changes Affecting Condominium Ownership

Legal Changes Affecting Condominium Ownership

Posted by: Condominium Group , January 12, 2023

As of January 1, 2023, the City of Toronto and the Federal government have implemented two important changes in relation to residential property ownership.

Toronto Vacant Home Tax Law: By-law No. 97-2022

Effective January 1, 2023, the City of Toronto implemented a vacant home tax which applies to all residential properties, including homes, apartments, condominiums and co-operatives. Shared facilities that contain a washroom and kitchen, as some guest suites do, are also subject to the tax.

All owners of residential properties within Toronto must declare the occupancy status of their property annually (and this year by February 2nd), regardless of whether the property is currently occupied or not. Notices have been sent to all registered owners, and these set out the necessary information for completing the required declaration.

The vacant home tax will be applied to residential properties that:

• Have not been used as the principal residence by the owner(s) or any permitted occupant(s); or

• Have been unoccupied for a total of six (6) months or more during the previous calendar year.

• The amount of the tax is one percent (1%) of the assessed value of the property, and will be applied to all Toronto residences that are declared, deemed, or found to be vacant, e.g. by failing to make the declaration.

• The tax does not apply to residential properties that are:

• The principal residence of the owner, a permitted occupant or tenant; or

• Fall under one of the qualifications for an exemption.

There are penalties for those who do not pay the tax on time, including interest charges and fees, and fines for those who do not submit their declaration on time. These fines can be as much as $10,000 per occurrence.

The Federal Foreign Home Buyer Ban: Section 235

The Federal government has implemented on foreign buyers purchasing residential real estate in Canada through the Prohibition on the Purchase of Residential Property by Non-Canadians Act (the "Act"), which real estate includes detached homes, semi-detached houses, rowhouse units, and condominium units.

The prohibition applies to anyone who is not a Canadian citizen, a permanent resident, or registered as an Indian under the Indian Act The Act also prohibits the purchase of such property by corporations that are not incorporated in Canada or listed on a Canadian stock exchange. There are some exceptions in the Act for certain temporary residents, or spouses and common-law partners of Canadians.

Additionally, the ban does not apply to:

• Homes located in municipalities with a population of less than 10,000, or to recreational properties such as cottages and lake houses;

• The purchase of larger buildings with multiple units; or

• Valid and binding agreements of purchase and sale entered into before December 31, 2022.

Penalties for violating the Act can be up to $10,000, as well as being ordered to sell the residential property. Also, those who knowingly assist a non-Canadian citizen or non-permanent resident in such a purchase may also be held liable and face fines.