Put sugar and ½ cup water in a medium saucepan and bring mixture to a boil while stirring occasionally.
Once sugar has dissolved, let mixture continue boiling without stirring. Watch closely for mixture to turn a light amber color. It usually takes about 8-10 minutes for me, but it can go from light amber to being burnt very quickly, so be sure to watch closely.
Once mixture is light amber, immediately remove from heat and slowly and carefully pour remaining ½ cup water in. It will likely splatter and steam up, so stand back while pouring. Add vanilla and stir well to combine.
Pour syrup into a heat-proof bowl or mason jar and place in fridge to cool completely. Syrup will continue to thicken as it cools.