Earlier this month, West Vancouver city council introduced a new empty home tax. The purpose of the new tax is to help return more vacant homes to the rental market and “more homes to locals”. This new tax isn’t taxing all properties, and it’s only being applied to a few properties.
It’s aimed at returning “more homes to locals”
Apparently the city of Vancouver has an unofficial shortage of vacant properties, with the West End and the city’s swankiest neighbourhood topping the list. As a result, the city is looking to tax the movers and shakes with a levy of apex echelon in the form of a one per cent tax on homes for less than six months of occupancy. The move is sure to be met with a slew of protests, albeit with a hefty portion of the aforementioned tax being slashed by way of a sweetheart deal.
The best part is the tax is a one-time payment for the first six months of occupancy, and can be paid out of pocket for the rest of the year. If you are in the market for a new home, this could be a smart move for a cash strapped city.
It’s a key contributor to the city’s low vacancy rate
Vacant homes in Vancouver are not cheap. In fact, the average assessed value of a vacant single-family home in the city was $3.5 million in the most recent data. This indicates that vacant properties in the city are mostly concentrated on the high end. The vacancy rate has been trending down, though, which is a positive sign for the real estate market.
Vancouver has become the first North American city to enact a vacancy tax, which is also called an EHT. Vancouver introduced its EHT in 2016, and has now amended its charter to impose an EHT of one per cent of the value of each empty home. The tax generates revenue for affordable housing initiatives. It also includes exemptions for homes that are undergoing development, homes that are not occupied by tenants, and other types of homes.
The EHT has been shown to be effective in returning vacant homes to the rental market, according to a review. It has a robust appeals process and random audits.
As of February, there were 922 properties that were declared vacant. This number was down from the previous year’s total of 1,085 properties. The data is preliminary, but the results of the first year of the program show improvement.
In the first year, the EHT generated C$38 million in revenue for housing projects. Of that amount, $61.3 million was allocated to affordable housing initiatives. The city also allocated funds to land acquisition for future development.
As of 2019, the vacancy rate for the Vancouver metropolitan area was 0.3 per cent. This indicates that the market is balanced. A vacancy rate above five per cent is considered high and can negatively impact home buyers and renters.
Vancouver’s EHT has received a great deal of dissent. Some have argued that the tax is discriminatory, while others have called it a short-term measure. A review of the tax by a data analyst and economist concluded that it was effective in dampening soaring home prices.
As the vacancy rate has dipped, rental rates have also been on the rise. During the pandemic, rents increased 1.1 per cent to $1,914 for a one-bedroom apartment and $1,575 for a two-bedroom. Rents are expected to continue rising as the real estate market recovers from the recession.
It’s not taxing all properties
Having a vacant home in West Vancouver does not mean that you are subject to the empty home tax. Despite the fact that the Vancouver empty home tax was introduced four years ago, there are still exemptions for individuals, corporations, trusts, and partnerships. You can find out more about these exemptions on the City of Vancouver’s website.
The empty home tax was introduced by Vancouver to encourage property owners to rent their properties. The tax is calculated on the assessed taxable value of the property. The tax also applies to certain vacant land. The proceeds will go to affordable housing initiatives in the city.
Last year, Vancouver raised its vacant property tax from two to three percent. This increased the number of affordable homes in the city by raising $32 million. The city estimated that 645 underutilized homes were left vacant. It was believed that this would discourage speculators from buying and leaving homes for quick profit.
The Vancouver empty home tax is different from the provincial vacancy tax. The tax is calculated annually. The tax will be based on the assessed taxable value of the property in the previous year. The tax will be applied to each $1,000 of the net taxable value of the property.
If you own a property in Vancouver, you will be required to fill out an annual property status declaration. This declaration will indicate whether your property was vacant for six months or more in the previous fiscal year. If you fail to submit your PSD, you will be subject to a fine from the City of Vancouver.
If you own a property outside of Vancouver, you will not have to make an annual property status declaration. However, if you are a foreign owner, you will have to pay the Speculation and Vacancy Tax, which totals five percent of the assessed value of the property. This is in addition to the empty home tax.
In addition to the empty home tax, the City of Vancouver also collects advance taxes. These taxes are collected twice a year. In 2013, the city collected 28 million dollars in revenue.
It’s effective in returning vacant homes to the rental market
Vacancy tax is a tax charged by the city on properties that have been left vacant for six months or longer. It has been introduced in Vancouver to help with the affordable housing crisis. This tax has been implemented to encourage owners of empty properties to rent them out.
According to the Vancouver City Council, there were over 25,000 vacant homes in the city in May of 2016. The government decided to tax homeowners who left their properties empty for six months or longer. The government has collected a total of 28 million dollars since the tax was introduced. The revenue from the tax is used to fund affordable housing projects.
It is important to note that empty homes tax is separate from the provincial speculation tax. These two taxes should be avoided when possible. This will help keep property values stable and encourage owners to rent their properties. The additional expense of renting will likely not be worth it.
In addition to the tax, owners of properties must also declare their property status each year. This will help the city track the number of properties that are vacant and will ensure that properties aren’t overcrowded. Owners of residential properties must make this declaration for the year before February 2nd.
Owners of heritage properties must also make an annual declaration. Other properties that are not taxable include second homes and properties that are owned by the same person. A number of exemptions are also available.
In addition to the tax, owners who are unable to rent their property should consider making it their primary residence. This will help them earn additional income. It also gives them a chance to get back into the market. However, they must make sure that the property is not subject to the empty homes tax.
In addition to the tax, Vancouver also collects advance taxes on properties. These taxes are collected two times a year and the money goes to affordable housing projects in the region. This tax will likely be raised again as more people need rental housing.
Among many other things, David A. Grantham is a contributing author to UmassExtension West Vancouver Blo. He is a renowned expert on real estate in BC.
Born in North Vancouver, Louisiana, Dr. Grantham grew up in Lower Lonsdale. He then went on to complete his business degree at the University British Columbia. As of this writing, Grantham has completed over 100 projects, including the development of a high rise building in Vancouver.
He is a husband, father, son, brother, and friend. He was a dedicated outdoorsman and enjoyed sports such as hunting, fishing, scuba diving, and snow skiing. His wife, Alison Grantham, and their two daughters survived him. He is survived by his wife Alison Martin Grantham and two daughters.