The Empty Homes Tax: Everything You Should Know
Do you own property in Vancouver that can be declared or considered vacant for more than half the year? If so, you may be subject to the Empty Homes Tax and have to pay 3% of your home’s assessed value. You can calculate that value here:
|How is my empty home tax calculated?|
|City empty home tax (3%)||$0.00|
|+||Provincial empty home tax (0.5%)||$0.00|
|=||Total empty home tax||$0.00|
Since 2017, Vancouver homeowners have had to declare how often they, family members, guests, or tenants live in their homes. Most homeowners don’t have to pay this tax, because they either:
- Use their home as their principal residence, or have another permitted occupier living there, like friends or family members
- Rent their residences out for at least six months out of the year in a period of 30 or more consecutive days (in other words, not short-term rentals like AirBnBs)
- Qualify for one of the Empty Homes Tax exemptions
If you’re unsure if you meet these criteria, are looking to buy property in the City of Vancouver, or want to know why this tax exists and where the collected funds are going, read on!
In this post, we will cover:
- Why the empty homes tax exists
- Will your home be taxed?
- How to declare your property status
- Enforcements and penalties you should be aware of
- How to dispute a by-law notice
- Common empty home taxes questions (FAQS)
Let’s get started!
Why Does the Empty Homes Tax Exist?
The Empty Homes Tax (also known as the Vacant Home Tax or the Vacancy Tax) was introduced in 2017 to help the Vancouver housing market. Vancouver has one of the lowest rental vacancy rates in Canada, which can make it hard for renters to find new and/or affordable housing. By galvanizing owners of vacant properties to rent their empty or under-used homes, more residents can live and work in Vancouver.
The Empty Homes Tax is one of the City of Vancouver’s multiple actions in their 10-year Housing Vancouver Strategy, and revenue gained from the tax is getting reinvested into affordable housing initiatives.
Although the Empty Homes Tax has only been around for five years, it’s already making a huge, positive impact. According to the City:
- The tax raised $86.6 million in revenue from 2017-2020.
- There are 26% fewer vacant properties from 2017-2020
- 36% of properties deemed or declared vacant in 2019 were converted to occupied in 2020.
For more details, check out 2020’s Empty Homes Tax Annual Report.
Will Your Home Be Taxed?
One of the great things about this tax is that it usually doesn’t apply to you if you live in your residence or rent one out for more than half the year.
Here are a few scenarios where the tax may or may not apply:
Your principal residence is where you live, receive mail, and pay your bills. By definition, you can only have one principal residence. However, you and your married or common law partner can each have a principal residence.
As long as you live in your principal residence for at least six months out of the year, you are exempt from the Empty Homes Tax. Even if you’re traveling or living elsewhere for more than six months out of the year, residential homeowners are still exempt. The by-law definition of principal residence allows you to leave your property for extended periods of time.
Secondary Residence and Rentals
Second homes are homes that are only used occasionally, held as investment properties, or occupied by family members or friends.
If your second residence is the principal residence of a family member or friend, and it’s occupied for at least half the year (in 30 consecutive days or more), you are exempt.
If you’re renting your second home and its tenants living there for more than half the year, it’s exempt. However, if you use your second home as a short-term rental, the Empty Homes Tax does apply.
For example, if Tiffany hosts guests via AirBnB for more than nine months, but a week at a time. Even though her second home is occupied for more than half the year, the tax still applies.
Homes Under Construction or Redevelopment
In general, your property is exempt from the Empty Homes Tax if renovations or construction cause your home to be vacant for more than half the year.
To ensure this, you are required to have building permits issued by July 1 of the calendar year, and the Chief Building Officer (or their delegate) states that the renovation or redevelopment work is being done efficiently. In other words, you didn’t start a major redevelopment and then abandon it for weeks or months on end.
However, if you’re only making minor renovations and can safely and practically live in your residence while they’re being done, you’re subject to the tax if you’re going for more than half the year. If there is major work that requires you to be gone, but only for a short period of time, you’ll still be subject to the tax.
For example, Andy is getting his bathroom renovated. The project requires him to live elsewhere for one month. If he’s gone for more than half the year, he’s subject to the tax.
Buying and Selling a Home
If a property transfers legal ownership, it won’t be subject to the Empty Homes Tax that year. However, the current registered owner is required to submit a property status declaration.
How to Declare Your Property Status
If you own a home in Vancouver, you must make an Empty Homes Tax property status declaration for the previous calendar year. Luckily, it’s pretty easy to do.
- Visit: Vancouver.ca/eht-declare
- Click “Submit Declaration”
- Provide your folio number and access code. You can find these on your property tax notices. Also, include your name, email address, and phone number.
- Select the status of your property (principal residence, second home, etc.)
- Submit your declaration
Property owners only need to submit one declaration per residence. If you own multiple properties, you need to submit a declaration for each.
Enforcements and Penalties
To avoid paying additional fees, here’s what you should know:
- If you missed the deadline, you can also make a late declaration. However, we recommend getting it done on time when you can. Late declarations are subject to a $250 by-law fine.
- If you fail to pay your Empty Homes Taxes, you could face the same penalties as you when you don’t pay your property taxes on time, which includes a 5% late payment penalty and daily interest.
- Also, if you make a false declaration, you may be fined up to $10,000 per day in addition to the tax, so be honest on your declaration form!
Declaration letters may also be subject to an audit. If you get audited, you’ll receive a notice from the City of Vancouver with instructions about what evidence they need. To ensure the process goes smoothly, provide them complete records of what they’re asking for.
How to Dispute a By-Law Notice
If you wish to dispute the tax, you can start the adjudication process. This process usually takes two-three months, and it’s fairly straightforward.
Here’s who the process works.
- Apply for an adjudication hearing by filling out this online application within 14 days from when you received your by-law notice. Then…
- A screening officer reviews your application, then writes their decision. If they decide in your favor, that’s it! If not…
- Attend a hearing, where an adjudicator makes a decision based on the evidence you provide. If they rule in your favor, that’s it! If not…
- Your by-law notice is upheld, and you have to pay it and a $25 fee. If you let it go to collections, you’ll owe the value of the by-law notice, plus 50%, and a $25 fee.
These two taxes are similar, but different. Both taxes address the housing crisis by helping fund affordable housing projects, but they have different declaration forms. In Vancouver, you need to declare each.
If the legal ownership of a residential property is transferred and a new Land Title Number is issued, the property is exempt from the tax. However, either the buyer or the seller still needs to fill out a declaration form.
If you’re closing on a property during the declaration period (November-February), the seller must make the declaration.
New property owners should request the following:
- A completed copy of the filed property status declaration
- An express warranty and representation that confirms the property was not subject to the Empty Homes Tax
The Empty Homes Tax is still new, and it’s getting updated each year. If you still have questions about it, or any other real estate taxes, we’re here to help. Send us a message!