Vancouver

Vancouver To Triple Empty Home Tax To 3% In 2021

Vancouver is doubling down on the success of its vacant home tax…well, tripling down, technically. The Vancouver Empty Homes Tax (EHT) will be tripled from its original rate for the 2021 assessment year. The tax, which places a penalty on underused homes, was put in place to help encourage more efficient use. 

Vancouver Empty Homes Tax (EHT)

Vancouver real estate’s notoriously low property tax rate made it ideal for carrying vacant property for a long period of time. In order to discourage this kind of behaviour, the City joined other places like Paris, in taxing vacant homes. The tax reduces the cost effectiveness of vacant speculation, forcing owners to decide if they really want to carry the empty home. There’s some notable exceptions, like if the home is a principal residence or rented for 6 months. However, generally it helps to close the inefficiency created by the low rates that attract yield chasing. 

Vancouver To Tax Vacant Homes At 3%

Vancouver plans on tripling this tax for next year. Council voted to increase the vacant home tax to 3% of the assessed value for 2021. The rate last charged was 1% in 2019, and it’s slated to increase to 1.25% in 2020. The aggressive measures are likely to cause empty homeowners to really think about whether those empty units are worth it.

Hundreds of Vacant Homes Are Now Being Used

The City’s vacant home tax appears to be making a big impact, with the total number of units falling. In 2017, the first year the City had a vacancy tax, there were 2,538 homes found vacant without exception. By 2018, that number fell to 1,989, and finally down to 1,893 in 2019. When including the number of exempted homes that transitioned to tenanted use, this added over a year of housing supply. Although the low rate of, or negative, price appreciation also tends to contribute to more efficient use as well. 

The tax revenue generated is also raising cash for the City, which is being used to fund affordable housing. In 2017, the City collected $33 million from vacancy taxes. As use improved, the revenue fell to $23.3 million in 2018. Last year, that number increased to $27.9 million, despite fewer vacancies. This would imply more expensive homes are being left vacant, potentially also helping with affordability. 

The tripling of the tax might seem like Vancouver’s politicians just have big hearts, but it may be the City getting ahead of bigger problems. The pandemic’s acceleration of work from home (WFH) and shuttering of local shops has lessened the importance of expensive urban hubs. So far this has been a big gain for the suburbs, and more affordable cities. Without more incentives, such as more affordable housing, the long-term viability may be impacted. No one wants to live in a City with expensive and hard to find housing, to be next to Starbucks, when they’re paid the same to work anywhere now.

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8 Comments

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  • Reply
    Robert Michael Angus 4 months ago

    Vancouver does not have “notoriously low property tax rates”. This was a fiction made up by Professor Tom Davidoff at UBC. His thesis was that the property tax rate was less than some other jurisdictions. The cause of this was the high assessed value of the properties. The actual tax paid on a property in Vancouver is higher than almost everywhere in Canada for similar properties. Dr. Davidoff’s greatest achievement was that he claims to be an expert in real estate, but did not buy into Vancouver’s rapid increase in values, until they hit their peak in 2015.
    The “empty homes tax” is really another form of “envy taxes”, that are very popular among the left wing of the political spectrum. It certainly caught a lot of people who lived outside of the city but needed a pied a terre.
    Other “envy taxes”, that have been implemented in BC are the so-called “school tax”, which adds an annual surtax on residential properties worth more than three million dollars regardless of the owner’s ability to pay, and a so-called annual “speculation tax” that applies to recreational properties – again based solely of the value of the property.
    None of these taxes have anything to do with improving affordability or accessibility and everything to do with a perceived vision of what is “fair” for most peoples.

    • Reply
      Terrance Yu 4 months ago

      I own in Vancouver, and have a property in Los Angeles. My LA property tax is more than 4x my Vancouver property. It’s even a third of the Toronto rate currently.

      The low rate is what causes new developments to have such such exorbitant charges.

    • Reply
      SH 4 months ago

      The city is broke and needs the money. The middle class is tapped and is anyway fleeing Vancouver. What’s wrong with extracting a tiny bit more from money-launderers and satellite families that currently pay almost nothing into city, provincial, and federal coffers? Do you like having potholes repaired or not? People with vacant properties who don’t like it are quite free to sell and leave. Quit whining.

  • Reply
    Mortgage Guy 4 months ago

    Good, but they need to raise property taxes too. They shouldn’t be raiding my income taxes to make up their lack of spending.

    • Reply
      Bob Booper 4 months ago

      So only people with large amounts of money can own a home then? You know, the same people that have ample legal support so you can kiss you tenant rights good by as well. You want more home owners to be people of lower income classes to level the playing field for everyone so there is no unfair advantage – monopolizing property ownership to only the wealthy will make it like a business. That is what happens when you increase property taxes as you suggest – out of reach for lower income and middle income classes. Do people even think anymore before they comment?

      Vacancy tax at least is more reasonable.

  • Reply
    Robert Michael Angus 4 months ago

    Vancouver has the highest single-family property taxes in Canada: SFU professor
    Kenneth Chan|
    Oct 3 2020, 9:34 am

    As of June 2019, Vancouver’s single-family dwelling homeowners paid an average of $6,235 in annual property taxes to their municipal government, just after Ottawa at $5,376, Toronto at $5,182, Victoria at $3,753, and Calgary at $3,480. This does not include the additional school property tax.

  • Reply
    Quinn Harris 2 months ago

    That is a bold move considering the property rates are already pretty low in the area. If there is a tripled tax rate on the already low prices of property, it’s gonna spark an outrage that’s for sure.

  • Reply
    George 2 months ago

    I have been trying to find a tenant for my apartment but it is really hard to find a tenant in the downtown area due to the pandemic the last couple of months and the cost of everything is going up like crazy.
    The city website says the owners are encouraged to reduce the rent until a tenant is found. What kind of logic is this? Everything else is increasing in the city including property tax, insurance, maintenance fees but the owners are encouraged to reduce their rents to occupy the homes.

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