Vancouver city council to decide on decreasing empty homes tax – BC

Vancouver city council is reviewing a staff report Wednesday recommending a decrease of the empty homes tax first established in 2017.

Council upped the tax from three per cent of a vacant property’s value to five per cent in 2022, but now staff is recommending it shift back to three per cent.

A report from the city’s director of finance recommends the reduction, along with numerous new exemptions to the tax.

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The tax was designed to turn empty homes into housing and to ensure foreign owners, and those with primarily foreign incomes, contribute to B.C.’s tax system.

The tax targets properties that have been unoccupied for more than half a year.

“The significant tax rate increase from 3% to 5% effective in 2023 may possibly support further conversion of additional homes from empty to occupied,” the report states.

“It can also result in a higher risk of tax evasion and consequently, requiring more resources for performing compliance work and increased impact of unintended consequences.”

The report states that vacant properties in the city fell by 20 per cent in 2020-2021 and again in 2021-2022, both under the three per cent tax, but adds the drop may be related to the COVID-19 pandemic.

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The city said it has dedicated more than $115 million in revenue from the tax toward affordable housing since the measure was first implemented.

It suggests allowing for a longer-term observation of whether the decreases were related to the pandemic or the tax.

It also recommends the city explore a graduate tax rate, with higher tax rates targeting properties that remain vacant for multiple years.

The report also recommends numerous new exemptions to the empty homes tax.

Current exemptions for the tax include properties under renovation, property transfer and strata rental restrictions.

The report suggests adding an exemption for properties with a building permit, development permit, rezoning inquiry, rezoning application or policy inquiry issued in the tax reference year.

Other recommended exemptions include properties that can’t be occupied due to hazardous conditions, properties being used as a second residence closer to medical treatment, and a one-time exemption in 2023 for properties with strata rental restrictions.

Council will be reviewing the report during Wednesday’s meeting.

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— with files from Global News’ Simon Little

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