Ontario Offers a Vacant Commercial Property Rebate Program

The residential property market in Ontario continues to thrive year over year. However the commercial and industrial sectors didn’t fare so well. Are these properties just too risky for investors? Vacant commercial property rebates are designed to assist investors in mitigating some of the risks.

Over 50% of small businesses fail in their first year. More than 1200 businesses in Ontario declared or proposed Bankruptcy in 2013. Many, many more medium-sized businesses are downsizing their operations and/or closing satellite locations.

These simple facts are enough to make anyone considering an investment in commercial or industrial property think twice. After all, what if you can’t find a tenant? What if your tenant declares bankruptcy or defaults on the lease? Costs can really add up when your property is vacant, and it can take time to find the right tenant.

While there is no doubt that investing in commercial property is risky, it can be extremely lucrative if you play your cards right. And here’s the good news – if you own a commercial or industrial property in Ontario that is partially or entirely vacant, you may qualify for provincial and municipal tax rebates that can offset some of your carrying costs during the vacancy.

So what are these commercial property rebates exactly? At a provincial level, rebates are offered for both the provincial land tax and the education tax. At a municipal level, you may qualify for additional property tax rebates.

property tax reduction for low-income

As an investor, you are eligible to receive these commercial property rebates if your entire commercial or industrial property was unused for at least 90 consecutive days. Industrial or commercial property that is partially vacant may also qualify for these rebate programs, provided that the suite or unit is clearly distinct or separate from the occupied portion of the property and that it has been empty for at least 90 consecutive days. Units that are vacant because they require repairs or renovations may still qualify for these rebates, so when in doubt, it never hurts to submit an application and see what happens.

Unfortunately, seasonal properties are not eligible to receive these rebates for the off-season, nor are they certainly new, never occupied properties. If your property is vacant but leased to a tenant, it stands to reason that you do not qualify for these rebates either.

You have to apply for the provincial and municipal rebates separately, but the application forms and instructions are readily available online. It is a good rule of thumb to take pictures and document the vacant space for posterity, as the onus is on you to prove that the space is both vacant and eligible.

The rules for both the provincial and municipal rebate programs were defined at a provincial level, so they are pretty standard from municipality to municipality. Nonetheless, it is a good idea to check in with your city for any individual variations and to get the appropriate application forms and assistance.

There is no doubt that commercial or industrial real estate can be a lucrative asset for sophisticated real estate investors. Rebate programs such as the commercial property rebate make it possible for investors to carry and maintain their property until the right tenant comes along, but no investor wants their property to be vacant any longer than necessary. If you need any help with a commercial property lease, Buy or Sell, go ahead and contact Buttonwood Property Management today!

Sabine Ghali
Sabine Ghali
Helping real estate investors build wealth over time

Sabine Ghali, Managing Director at Buttonwood Property Management, Award Winning Real Estate Broker and an Entrepreneur at heart. Sabine is on a mission to help investors create real estate wealth over time in the Greater Toronto Area. Sabine is published in a number of media outlets, including Toronto Star, The Globe and Mail, Toronto Sun, Entrepreneur, Forbes, and Gulf News, among many others.