Newsletter Article: Getting a Return on Empties
Effective this tax year, the City of Vancouver’s new empty homes tax requires all Vancouver homeowners to self-declare whether a property is their principal residence. Homes that aren’t principal residences and aren’t rented out or exempted will be taxed on 1% of the assessed value. So a $1-million home would be taxed $10,000.
Vancouver Mayor Gregor Robertson says the main goal of the tax is to encourage owners to rent out their properties in a city with the lowest rental vacancy rate and highest rents in Canada.
As reported in the Vancouver Sun, a 2016 Stats Can census noted 25,502 unoccupied or empty housing units in Vancouver.
Vancouver City staff have consulted with the public, met with local experts and sought input from cities around the world with vacancy taxes, including Paris and Jerusalem. Most properties will not be subject to the Empty Homes Tax, including those:
• Used as a principal residence by the owner, his/ her family member, or a friend for at least six months of the current year;
• Rented for at least six months of the current year, in periods of 30 or more consecutive days;
• Meeting certain exemption criteria, including properties under renovation or construction with valid permits, homes that are empty because the occupant is getting medical care or has recently died, condominiums subject to existing strata rental restrictions, and properties the owner uses for work purposes for at least 180 days a year but claims principal residence elsewhere.
For enforcement, the city plans to audit homeowners on a targeted and random basis. Owners will be required to prove the home is their principal residence. They will be able to appeal, and the city will establish a review office to handle complaints.
Penalty for failure to pay tax
Homeowners who fail to pay the tax will face a five per cent late payment penalty. If they still haven’t paid by the end of the year, the outstanding balance will be added to their property tax account and accrue daily interest.
Those who fail to declare their change to the status of their property by the second business day in February, 2018 will see their units deemed vacant.
Anyone who makes a false declaration could be prosecuted by the city with a maximum fine of $10,000 per day for the continuing offence.
The city says it will cost $4.7 million through the end of 2018 to set up the tax, with an annual cost of $1.5 million after that. But the city says it expects tax revenue to cover the costs, with some money left over for affordable housing initiatives.
Got an empty home or rental unit? Let FirstService Residential manage it for you!
Did you know that besides being the largest strata management company in Greater Vancouver, FirstService Residential has a very dedicated and experienced Rental and Commercial Property Management department?
Yes, from purpose-built rental apartment buildings to shopping centres, office buildings and individually owned condos and houses, we do it all! That includes managing the rental units in your building on behalf of your owners who live abroad or who are local investors.
The synergies created by having one company manage strata affairs and rental tenancies are huge. The rules alone (such as registering tenants with the Strata Corporation via a Form K to indicate they understand and will follow bylaws and rules) can be daunting. Experts who understand the rules and realities of managing can be a boon.
If you or any of your neighbours would like help managing and renting your strata units, please call or email:
Judith Harris, General Manager Investment Properties, FirstService Residential
T: 604.689.6975. E: email@example.com
DISCLAIMER: All information provided by FirstService Residential is advisory in nature. Any such information may not identify or contemplate all unsafe conditions; others may exist. FirstService Residential does not imply, guarantee or warrant the safety of any of the client’s properties or operations or that the client or any such properties or operations are in compliance with all federal, provincial, or local laws, codes, statutes, ordinances, standards or recommendations. All decisions in connection with the implementation, if any, of any of FirstService Residential’s advice or recommendations shall be the sole responsibility of, and made by, the client or other recipient of the information.