Despite concerns that people who own more than one home will be unfairly affected, Vancouver’s City Council has voted 8-3 in favour of taxing the city’s empty homes. Starting January 1st, 2017, all non-principal residences that are unoccupied for six full months a year or more will be taxed 1 per cent of their assessed value.
City staff have been researching empty homes in Vancouver since February of this year, and recommended last week that the 1 per cent tax be implemented. The goal is to alleviate Vancouver’s low rental vacancy rate by encouraging owners of the city’s 10,800 year-round empty homes and 10,000 “under-occupied” homes to rent out their properties.
“I think the way it is proposed is going to achieve thousands of units in the short term,” said Vancouver Mayor Gregor Robertson, who voted in favour of the tax.
Although some exceptions will apply — for example, homes undergoing major renovations will not be taxed — punishment will be harsh for anyone attempting to circumvent the tax. The plan is for rule breakers to be fined up to $10,000, with additional charges being added each day their offence continues.
The tax will be the first of its kind in Canada and some fear that it will have negative repercussions for people who own more than one home. The Globe and Mail notes that in the past week, Vancouver’s City Council has received a slew of letters from homeowners “pleading special circumstances.”
A key complaint has been that the tax should only apply to owners of investment properties in Vancouver, not people who are maintaining second homes in the city. “The second home is a home for most people,” the Globe quotes one homeowner as saying.
Some believe that there shouldn’t be a tax at all — another homeowner suggested to City Council members that Vancouver use incentives, not a tax, to encourage people to rent out their empty homes. She argued that although she has rented out her Coal Harbour condo in the past, she wasn’t able to make enough money to cover all the costs associated with the unit.
Nevertheless, the tax passed, and will be assessed and payable in 2018 after coming into effect at the beginning of next year. The city will conduct random audits, and net revenues will be directed toward affordable housing initiatives. After the tax is implemented, city staff will work with the Canada Mortgage and Housing Corporation and other organizations to gather data on its impact.