Last November 2016, the Vancouver City Council passed the “Vacancy Tax By-Law” bringing a one per cent tax on empty homes to ease pressure on the rental housing market. With average house prices at $1.4 million in Vancouver, this change could set investors back tens of thousands of dollars.
The tax applies to non-principal residence homes left empty for at least six months of the year. The homeowner is required to have the home rented out by July 1 of this year or face the penalty. The homeowner is responsible for declaring a vacant property and could be subject to fines up to $10,000 for a false report.
Vancouver hopes to improve the vacancy rate 3 to 5 percent in a year by homeowners putting empty homes on the market.
If someone owns a second or third home all is not lost. There are several exemptions to the Vacancy Tax By-Law. For example, the vacancy tax won’t apply if a property owner occupied the residence for at least 180 days of the year because they work in the City of Vancouver even if the property wasn’t the principal residence. Other exemptions are properties under renovation, owners who are in hospital, and condos with strata rental restrictions.
Rise Advisors works with you to review your situation to determine if an exemption applies to you. Our tax specialists review your specific circumstances to understand exactly how the Vacancy Tax By-Law may be applied.
It’s important to understand what “vacant” and “unoccupied” means. Unoccupied means the property isn’t your principal residence or you don’t have a renter in the property. A property is vacant if it has been unoccupied for more than 180 days during a vacancy reference period.
Another key factor to understand is the meaning of “principal residence.” If a home is your principal residence the tax doesn’t apply. The tax code says the principal residence means “the usual place where an individual lives, makes his or her home and conducts his or her daily affairs.”
Contact Rise Advisors so we can review your property and circumstances and possibly help you mitigate the effects of the Vacancy Tax By-Law.