What will the Empty Homes Tax mean for you?
As a city in the midst of a housing crisis, Vancouver has instituted an important policy initiative known as the Vacancy Tax or—more informally— the Empty Homes Tax in hopes of relieving the extreme pressure on the city’s rental housing market. In a 2016 study that looked at data on electricity use, it was estimated that there are around 10,800 homes that are empty year round. The tax hopes to make these underused properties available for long-term rental by driving owners of empty homes to rent them out to those who live and work in the City of Vancouver.
As well as acting as an incentive to rent out properties, the net revenues from the Vacancy Tax will be reinvested into the community in the form of affordable housing initiatives. This is intended to in continue to provide solutions to Vancouver’s housing crisis in the future.
Who has to pay it?
The Empty Home Tax applies to residential properties that are left unoccupied for six months or more of the year. However, the minimum of 180 days does not need to be consecutive. The homes need to be rented out/occupied for 30 or more consecutive days at a time.
The relevant residential properties are in a category known as Class 1. These include single and multi-family residences, apartments, condominiums, seasonal dwellings and more that you can find here.
The owners of such vacant Class 1 residences will need to pay the rate of 1% of a property’s overall assessed taxable value each year. The tax is calculated (starting January 1, 2017) annually based on the value of the property in the previous tax year. If the tax isn’t paid, an additional 5% of the property value will be added as a late penalty.
There are some exemptions to the tax including if the owner or tenant was receiving long-term medical care, the title was transferred during the year, major redevelopment was underway and other further exemptions you can find here. Additionally, there are some other exemptions such as the exclusion of basement suites, laneway homes and secondary suites from the tax—these dwellings may remain vacant.
Firstly, if your property is not located in a municipality within the city, the tax will not apply!
Secondly, the tax does not apply to principal residences that are occupied (could be by the owner, a friend or family member) for a minimum six months per year. A principal residence is determined by the city through addresses attached to official documents like a driver’s licence, utility bills or income tax returns.