Empty Homes Tax Introduced

Description

On November 17, 2016 Vancouver City Council approves a tax on empty homes of one percent, maintaining that homeowners are treating housing as an investment and dramatically reducing the supply of rental housing in the City. The tax is implemented Jan. 1, 2017 and first payments are due in 2018.

an empty room

Potential Significance

Vancouver is the first municipality in Canada to approve an empty homes tax.

The tax is intended as a disincentive to property investors who are believed to be holding around 10,000 houses and condos off the market at a time when the vacancy rate in Vancouver is below one per cent. Staff project the one percent tax could turn up to 4,200 empty units into occupied homes while revenue from the tax will enable the City to recoup its administration expenses Net revenues from the Empty Homes Tax will be reinvested into affordable housing initiatives.

 

Background

  • The purpose of the Empty Homes Tax is to return empty or under-utilized properties to use as long-term rental homes for people who live and work in Vancouver. It is also intended to help relieve pressure on Vancouver’s rental housing market, as our city has one of the lowest rental vacancy rates and the highest rental costs in Canada.
  • The tax does not apply to principal residences or homes rented on a long-term basis.
  • A report submitted to City Council says about 10,800 homes–mostly high-rise condos–are empty year-round and roughly 10,000 more are “under-occupied homes.”
  • The tax was intended as a business property tax, reinforcing the principle that housing used as a business will be taxed as such.
  • Non-principal residences unoccupied for six months of the year or more, and vacant residential land are taxed at a rate of one percent of assessed value. The empty homes tax is in addition to current property taxes. The tax is not collected on principal residences or properties that are rented long-term. Property undergoing major renovations or under construction or redevelopment will also be exempt. Several additional exemptions are available.
  • Property owners are expected to report whether their property is empty. The city will conduct random audits and those who do not self-declare will face penalties.
  • The tax program will cost $4.7 million to set up and $1.5 million in annual operating expenses starting in 2018.
  • The new tax would mean a property owner of a million-dollar house would pay $10,000 for the empty homes tax and $3,165 in property tax, which works out to about the same payment that the owner of a $1-million commercial property would make.
  • On December 5, 2016, the City announced that they were partnering with LandlordBC to assist property owners affected by Empty Homes Tax

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