EMPTY HOMES TAX NOTICE
If you are a homeowner in Vancouver you have likely received a notice regarding the City’s new Vacancy Tax, also known as the Empty Homes Tax. The Vacancy Tax is a product of a City bylaw which requires all homeowners to submit a property status declaration by February 2, 2017. Instructions for making a declaration are fairly simple to follow and can be found online here.
ARE YOU AFFECTED BY THE TAX?
The Vacancy Tax applies to all residential property within the City of Vancouver that is not used as a principal residence of the owner (or a friend or family member of the owner) for a period of at least 6 months per year, or is not rented for at least 6 months per year (in consecutive periods of 30 days or longer).
PROTECT YOURSELF WHEN BUYING A HOME
If you are purchasing a residential property you may be forced to pay the Vacancy Tax if the seller fails to pay the new Vacancy Tax. However; there are steps that can be taken by your lawyer at the time you complete your purchase to limit the risk of buying a home that is then taxed because the previous owner failed to declare or made a misrepresentation in their declaration.
HOW MUCH IS THE TAX?
The tax rate charged by the Vacancy Tax is 1% of the BC assessed value of the home. This means that an empty 2 million dollar home in Vancouver will have an effective property tax increase of $20,000. The Vacancy Tax is charged each year if the home is empty. This is not a one-time tax.
Because the Vacancy Tax is so significant, certain exemptions have been carved out. Depending on your circumstances, exemptions to the Vacancy Tax include:
- estates of deceased people with pending grants of probate or administration;
- properties undergoing redevelopment or major renovations;
- owners or tenants who are under serious medical care;
- properties with Strata restrictions on rental limits made before November 16, 2016;
- properties that have recently been transferred;
- people that have second homes that they occupy for over 180 days in a year while working in the City of Vancouver;
- properties under restrictive court orders;
- limited use properties; and
- certain other special properties exempt from taxation.
You are not required to provide proof that one or more of the exemptions apply to you to make the February 2nd declaration, but supporting evidence will be required if your declaration is audited.
FAILURE TO DECLARE AND FALSE DECLARATIONS
If an owner fails to submit a property status declaration, or fails to provide supporting evidence to support their declaration – as may be required by the City for certain exemptions, the City will impose the Vacancy Tax on the property.
Owners should ensure that their declaration and the evidence they provide is truthful, as the City may also impose monetary fines of up to $10,000 a day against owners who make false declarations, in addition to the payment of the Vacancy Tax. If an owner believes that the City has made an improper determination that their property is vacant and subject to the Vacancy Tax, they can submit a Notice of Complaint to the City after March 15, 2018.