Empty Homes Tax Archives - The West Haven Group

Property Taxes in Vancouver- Which Ones Do I Have To Pay?

by Agencywebdev | Dec 11, 2020 | Property Tax, Property Title, Vacancy Tax

Vancouver has some of the lowest municipal property taxes in British Columbia. The actual tax rate varies year to year depending on the needs of the city, and the revenue collected is used to fund public services like schools, police, hospitals and more. However, there are also other taxes that may apply to your property, including the city’s own Vacancy (empty homes) Tax, and the more recently introduced provincial Speculation and Vacancy Tax, both of which may affect you if you don’t live in the property.

Property Taxes in Vancouver

Municipal Property Tax

Each year, property owners in Vancouver are subject to property tax, based on the fair and assessable value of their property. The rate for 2020 is $2.92568 per $1000 of taxable value. So the municipal property tax on a $600,000 property would equal $1755.

Regardless of whether you live in or lease your property, you are required to pay property taxes annually. In order to do so, you must submit a property status declaration, which will determine if you also need to pay the Empty Homes Tax.

Vancouver’s Empty Homes Tax

The Empty Homes Tax was implemented in 2017 to return vacant properties to the rental market, lest they be subject to an additional tax of 1.25% of the property’s fair and assessable value.

This tax only applies to you if you have more than one property (assuming the one you are residing in is your principal residence) and the additional properties are vacant for more than 6 months of the year. Whilst there are some circumstantial exemptions, if you are not living in the house, the Empty Homes tax may indeed apply to your property.

For an in-depth explanation of the empty homes tax in Vancouver please see Vancouver’s Empty Home Tax Explained.

B.C. Speculation and Vacancy Tax

A third property tax- the Speculation and Vacancy tax may also apply to your property in Vancouver if the property is not your primary residence, and is vacant for more than 6 months of the year. According to the B.C. government, the Speculation and Vacancy tax is ‘designed to discourage housing speculation and people from leaving homes vacant in B.C.’s major urban centres,’ like Vancouver.

As such, all property owners in the Metro Vancouver regional district must also complete a provincial property declaration (separate from the declaration required for the Empty Homes tax).

The tax rate itself varies depending upon your residential status. From 2019 onwards, the provincial Speculation and Vacancy tax rates are:

2% of the properties assessable value if you are a foreign owner or satellite family
0.5% for Canadian citizens or permanent residents

Do I Have To Pay Property Taxes in Vancouver if I Don’t Live in the House?

When it comes to which taxes you have to pay, and how much they equate to, it really depends on how you use the property. Regardless of how your property is used, you or whoever is listed on the property title will be subject to the annual municipal property tax.

If the property is leased, or occupied by yourself or your close family, it will not be subject to the additional taxes. However, if your Vancouver property is not listed as your primary residence, and is vacant for 6 months of the year or more, you will also be subject to both the Empty Homes Tax and the B.C. provincial Speculation and Vacancy Tax.

As an example, if you are a Canadian citizen or permanent resident, the tax on a $600,000 property (based on the most current rates) would be:

Municipal tax = $1755 (as above)
Empty Homes tax (1.25% of property value) = $7500
Provincial empty homes tax (0.5% of property value) = $3000

Total annual property tax = $12, 225.

Similarly, if you are not a Canadian citizen or permanent resident, your annual property taxes would be:

Municipal tax = $1755
Empty Homes tax (1.25% of property value) = $7500
Provincial empty homes tax (2% of property value) = $12,000

Total annual property tax = $21, 255

Whilst there are some exemptions to these taxes, they will be applicable in most cases if the property is vacant and is not your primary residence. If you’re unsure whether they will apply to your property, or are interested in acquiring an additional property and want to understand the tax risks, reach out and connect with us.

Vancouver’s Empty Home Tax Explained

by Agencywebdev | Aug 3, 2020 | Vacancy Tax

Rental availability and affordability in Vancouver has come under fire in recent years, as the property market continues to gain credence with national and international investors alike. With some of the highest rental costs and lowest rental vacancy rates in Canada, the City introduced the ‘empty homes tax’ in 2017 in an effort to turn these properties into long term rental opportunities.

How Does the Empty Homes Tax Work?

The empty homes tax (also known as the Vacancy Tax) is a levy is placed on homes/properties that are lying vacant. Although there can be a range of reasons that a property is empty, it has been identified as a key contributor to the lack of residential rental availability in the City.

In 2019, the average vacancy rate in Vancouver was a meagre 1.0% for 1 bedroom properties and 1.5% for two bedrooms.

Some neighbourhoods, such as the West End, have seen even lower rental availability, with only 0.6% availability for 1 bedroom condos, and 0.9% for two bedrooms. Upwards pressure on the rental market also saw an average rent increase 6% in 2018, compounding the issues of rental availability and affordability.

Source.

As a solution, the empty homes tax was introduced to encourage property owners to return their vacant properties to the rental market. If homeowners choose not to, they are charged a levy based on the assessed value of the property at that time.

Although it may seem unfair to charge property owners an additional tax, an estimated 25,000 homes (or 8.7% of total supply) in Vancouver were empty in 2016.

After being introduced in 2017, the empty homes tax is in its third year of operation. The levy itself started at 1% of the properties assessed taxable value. However the City council has recently voted to increase this figure to 1.25% for the 2020 tax year, pending an amendment to the Vacancy Tax bylaw.

Does the Empty Homes Tax Apply to Me?

There are a number of circumstances under which the Vacancy tax may or may not apply to you.

For starters, the empty homes tax only applies if you have multiple properties. Assuming you only have the one, and it is nominated as your principal residence, you will not be charged the empty homes tax. This is irrespective of how much time you spend in or out of the property, and is a common question among retirees who spend a lot of the year travelling, or those travelling overseas for work.

Second, if you have multiple properties, the tax is still only applicable if those properties are not being utilized. That is, not being made available for renters.

Third, if those properties are rented for more than 6 months of the year, the tax will not apply.

Other exemptions may arise where strata bylaws prevent or restrict rentals, or if the property title is transferred during that time. A more comprehensive list of exemptions can be found here.

Is the Empty Homes Tax Making a Difference?

The good news for renters is that yes, the tax does seem to be achieving the desired goal. In 2018 the tax was imposed on 1989 properties. This figure was a 22% reduction on the previous year, in which 2,538 properties were listed as empty.

Similarly, an initial review of 2019 property declarations only saw 789 listed as vacant. This is equivalent to another 15% reduction in unoccupied properties when compared with declarations made at the same point in time in 2018.

Unsure if your property will be charged the empty homes tax, or looking to return it to the market?

We’re here to help!

Reach out and connect with us for more information, or for any of your other property related inquiries.