In response to a rental vacancy rate of less than one per cent and a significant number of empty homes, the City of Vancouver is bringing in an Empty Homes Tax effective January 1, 2017. “Vancouver is in a rental housing crisis.
Empty Home Tax; “Vancouver is in a rental housing crisis. The city won’t sit on the sidelines while over 20,000 empty and under-occupied properties hold back homes for renters struggling to find an affordable and secure place to live,” says Mayor Gregor Robertson.
The city estimates the tax will raise $2.2 million per year when fully implemented. Initial costs to implement the tax are estimated at $4.7 million over three years. Ongoing operating costs are expected to total $1.5 million annually beginning in 2018.
How much is the Empty Home Tax?
The tax rate is 1 per cent of assessed value in 2017.
Owners of non-principal residences unoccupied for six months or more each year will pay this tax.
Who won’t pay the Empty Home Tax?
The tax will not apply to:
- Vancouver home owners, including snowbirds;
- owners of principal residences;
- a house with a basement suite or a laneway house if one of the units is occupied; and
- owners of properties rented long-term (with a tenancy agreement), or for at least 30 days in a row for a minimum of six months or a total of 180 days a year. For example, a homeowner renting a property for six 30-day terms is exempt from the tax, even if those six 30-day terms are not consecutive.
What is a principal residence?
The city defines principal residence as:
“The usual place where an individual lives, makes his or her home and conducts his or her daily affairs, including, paying bills and receiving mail, and is the residential address used on documentation related to billing, identification, taxation and insurance purposes, including income tax returns, medical services plan documents, driver’s licences, personal identification, vehicle registration and utility bills.”
- a property being renovated, or under construction or redevelopment (with permits);
- the owner (or other occupier) is undergoing medical or supportive care;
- the owner has died and the property is in probate;
- the property changed ownership during the previous year;
- there are strata rental restrictions prohibiting rental;
- the owner uses the property for six months a year for work and has a principal residence elsewhere;
- there is a court order prohibiting occupancy; and
- the property is limited to vehicle parking, or a residential building can’t be constructed because of the size or shape of the property.
Owners claiming an exemption must provide evidence, for example, building permits, a letter from a care facility, a death certificate, strata bylaws, or other relevant documents.
No exemption – what to do to avoid the Empty Home Tax?
Property owners who don’t qualify for an exemption can:
- live in their property as a principal residence;
- rent their property for a minimum of 180 days of the year, in periods of at least 30 consecutive days;
- hire a property management firm to rent the property on a long-term or periodic basis;
- have a family member occupy the property as their principal residence;
- sell the property; or
- keep the property as-is and pay the Empty Homes Tax.
Property status declaration: owners will receive notification to complete a property status declaration with their advance property tax notice issued in December each year.
February 2, 2018 is the deadline for all home owners to complete their first property status declaration stating whether their home is a principal residence or empty.
The declaration will have four categories:
- Principal residence.
- Eligible for exemption.
- Vacant property.
A property owner who doesn’t complete their declaration will have their home deemed empty and will pay the one per cent tax. All declarations will be audited.
April 16, 2018: Empty Homes Tax payment due.
December 31, 2018: unpaid tax added to the property tax bill.
Complaints and appeals
If a home owner has a complaint, they must file it with the Vacancy Tax Review office within 30 days of the date of the issue of the vacancy tax notice. A Vacancy Tax Officer will review the complaint and notify the home owner whether the tax will be imposed or reversed.
If the home owner disagrees, they have 21 days to appeal to the Vacancy Tax Review Panel. The panel’s decision is final.
The city listened
The city engaged in a thorough consultation process to help shape and define the tax, and to address property owners’ concerns and ensure they aren’t unfairly treated.
This consultation process included a mailout to 200,000 residential property owners, and an online survey completed by over 10,000 respondents. In total, 81 per cent of renters and 56 per cent of owners agreed with the tax.
As a result of the consultation, the city incorporated a number of changes to exemptions.
Did you know?
- 51 per cent of Vancouver households are renters.
- Vacant residential land will also be subject to the Empty Homes Tax.
- All net monies raised from the tax will be used for affordable housing initiatives.