The City of Vancouver has proposed an empty-homes tax rate of one per cent — and while staff say the levy is not intended to fill public coffers, it will need to be a money-maker to cover its hefty administration costs.
Those include a one-time expense of $4.7 million to set up the program and an additional $1.5 million in annual operating expenses starting in 2018, said Patrice Impey, general manager of the city’s financial services group.
Impey and other senior staffers joined Mayor Gregor Robertson on Wednesday at an event unveiling the details of their empty homes plan, which council will vote on next week. Staff project the one-per-cent tax could turn 1,500 to 4,200 empty units into occupied homes while recouping their administration expenses — though their report to councillors makes clear those estimates are based on a set of assumptions rather than hard data.
“It’s absolutely unacceptable for all that housing to be treated as a commodity first — as a business holding — when housing is in such short supply,” Robertson said before announcing the proposed tax rate. “Housing’s really about homes first, versus a business interest. We need to rectify that balance.”
City staff had previously said the annual tax would be set between 0.5 and two per cent of a home’s assessed value.
If councillors OK the tax, it would become the first of it kind in Canada.
The first round of taxes would be due April 15, 2018. At one per cent, the tax on a million-dollar home would be $10,000. That, in addition to property taxes of $3,165, works out to nearly the same tax bill that the owner of a $1-million commercial property would receive each year.
It would take the tax revenues from 470 empty, $1-million homes for the city to recoup its startup costs, and tax on another 150 such homes to cover the annual operating costs.
The city’s solution to identifying empty homes is fairly simple. Each homeowner would be required to fill out a self-declaration of whether their property is either a principal residence; tenanted for a combined six months a year; eligible for exemption; or vacant.
Only vacant homes would be subject to the tax. That means snowbirds, university professors on sabbatical and anyone else who leaves their homes empty for long stretches would not pay the tax, as long as they can prove their empty homes are their principal residences. Documentary proof would include income tax notices, vehicle registrations and government identification cards. Tenancy would be proven by things like lease agreements or insurance papers.
Any homeowner who failed to make a self-declaration would be assumed to be hiding an empty home. Fines for falsified declarations or other offences against the bylaw would start at $250 and be as high as $10,000, and could be charged each day an offence continues, according to city staff.
Homes that are used for six months of the year for work, but whose owners claim principal residence elsewhere, would be eligible for a tax exemption. Homes undergoing major renovations with permits — subject to strata rental restrictions — or whose owners are deceased or undergoing medical care, are among others that would be exempt.
“I just want to be really clear: Almost all Vancouverites will not pay the empty homes tax. This is only going to apply to those with second or third homes that are sitting empty most of the year,” Robertson said.
Ernst & Young helped design the audit process and Bull Housser & Tupper provided outside legal advice, according to the city. More than 10,000 people gave feedback on the city’s approach through an online survey and staff held two consultation meetings on the subject, according to the report.
“We have the lowest vacancy rate and highest rents of any city in Canada right now, and people are feeling squeezed on all sides. So it’s time for the next step,” Robertson said.
A city-commissioned study in March found at least 10,800 homes were sitting empty in Vancouver for a year or more, most of them condominiums. More than 22,000 homes were unoccupied or occupied by temporary residents on census day in May 2011.