Vancouver City Council Approves Raising Empty Home Tax to 5% of Assessed Value
Beginning with the 2023 tax year, the empty home tax (EHT) regulated by the City of Vancouver will increase to 5% of the assessed value of the property.
On Wednesday night, Vancouver City Council unanimously approved Mayor Kennedy Stewart’s motion calling for a 5% tax rate on vacant homes. Green Party councilor Michael Wiebe and A Better City councilor Sarah Kirby-Yung were absent from the vote.
The 2022 tax year rate will continue to be 3%, which was the rate first introduced for the 2021 tax year, also previously proposed by Stewart. When EHT was first introduced by the previous Vancouver City Council in 2017, the rate was 1%. In 2020, the rate saw its first increase to 1.25%.
“It’s a good move, I’ve loved the empty house tax from the start. The goal was to make sure houses don’t sit empty in a city that desperately needs housing, and that’s is what she did,” Green Party councilor Adriane Carr said during the deliberations.
“The side consequence is that the tax itself has helped fund affordable housing for people who are in dire need of affordable housing. It’s a win-win situation as far as I’m concerned.
At a rate of 5%, based on BC Assessment’s latest average assessment values for homes located within the jurisdiction of Vancouver, there would be an EHT tax of $100,000 on a vacant single-family home valued at average of $2 million, and an ISE tax of $38,000 on a vacant home. condominium or townhouse with an average value of $760,000.
In addition to the increase in the ISE rate, the number of audits for non-compliance and tax evasion will increase from the current rate of 9,000 per year to 20,000 for the tax reference year 2023. Additional hirings of municipal staff will be likely to be required to carry out the extended audit, the costs of which are to be fully recovered from ISE revenues.
Numerous changes were made to the motion, including an instruction to city staff to analyze how a further increase in ISE to 5% or 10% could potentially increase the rental stock and increase the risk of tax evasion. or unintended consequences. The analysis should also explore the impact of the current rate of 3%.
City staff will also explore how the ISE exemptions could be changed to improve fairness for those with legitimate vacancy and/or secondary property, and how the ISE will be affected by the new federal anti-rollover measures. In addition, City staff will conduct a cost-benefit analysis of doubling the number of audits.
City staff had previously warned city council that they were against raising the rate beyond 1% due to the law of diminishing returns and the provincial government’s introduction of its own speculation tax and vacancy.
‘What I’ve heard is council are supportive of this overall and they want to see empty homes available for residents and family, but I note there is a risk identified by staff of the city, and hopefully it will be evaluated and there will be a quick report on the latest changes,” said Lisa Dominato, councilor for A Better City.
Earlier this month, the mayor’s office said the ISE rate of 3% in 2021 would have doubled revenue – issuing more than $32 million in taxes and penalties on the number of homes declared vacant. , based on preliminary numbers compiled by city staff as of the February 2, 2022 deadline for the 2021 reporting year.
At the end of 2021, city staff reported that the ISE had generated a total of $106 million since 2017, when the tax was first enacted. At the time, there were 1,627 residential properties deemed, determined or declared vacant by the city for 2020 – down from 1,769 homes in 2019, as well as 2,036 homes in 2018 and 2,193 homes in 2017, the first year of politics.
At another meeting earlier this week, city council also approved the mayor’s request to formally ask the provincial government to consider an empty store tax on vacant storefronts. Similar to how the City of Vancouver originally got its empty home tax tool, a vacancy tax on commercial businesses requires the provincial government to pass legislation amending the Vancouver Charter.