Vacant Unit Tax

Back in the spring, development of a Vacant Unit Tax was given the green light. Recent studies have estimated that there are many residential units in Ottawa sitting vacant; meanwhile there are thousands of Ottawans who are either unhoused, underhoused, or otherwise precariously housed. We have people without houses and houses without people. A 1% vacancy tax is one way to help put two and two together. Rents and land values continue to go up in Ottawa, and that is in part driven by speculative pressures on the real estate market. A Vacant Unit Tax is one significant step in the right direction: it can disincentivize speculative behaviour while at the same time generating some revenue for the city that can be used to fund affordable non-market housing options. 

At the beginning of 2023, pending Council’s final approval in the spring of 2022, all homeowners will be required to complete a declaration based on their property’s occupancy status during the 2022 calendar year. If a property is not a principal residence, the homeowner will be required to declare whether the property was vacant, rented, or qualifies for an exemption in 2022. If the vacancy period in the calendar year exceeds 184 days, a vacancy tax will be added to the 2023 final property tax bill. Exemptions are being considered for the VUT in the following circumstances:

  • Death of a registered owner
  • Property owner in a hospital or long-term care facility
  • Arm’s length sale of the property
  • Specific court orders prohibiting occupancy, sale, or rental of the property
  • The property was undergoing extended renovations or construction

The city will audit declarations and properties each year. Staff will work with owners to review the accuracy of the property status and declarations. If it is proven false, the vacancy tax and penalties will apply.

In June 2021, Council approved the initial framework for the new Residential Vacant Unit Tax. The final report (including approved rate and exemptions) and supporting by-law will be presented to Council for approval in the spring of 2022.

There is a cost to the city in leaving these properties vacant, this should help Ottawa lead the way with another tool to assist affordability. 

Showing 1 comment

  • RW
    Richard Webb
    ()
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    I agree that housing should be a right. Not housing of one’s choice necessarily, but basic, healthy housing. But if it is society’s goal to ensure affordable housing, it is society itself that should bear the costs of any subsidization, not a particular sector of society (i.e. individual citizens that happen to own housing units). It is contradictory and disingenuous for the City of Ottawa to promote rentals by imposing a punitive tax on individual owners while the Government of Ontario simultaneously discourages rentals by imposing rent controls that force owners to absorb much of the cost increases over which they have no control (especially when many of these costs—taxes, electricity, water, etc.—are imposed by the same governments that decry the lack of affordable rental housing). Perhaps the city should consider the carrot of lowering taxes on properties if they are rented out rather than the stick of penalizing individual citizens if they are not (but of course the city’s self-interest dictates that penalizing residents takes precedence over foregoing revenue). Or perhaps the city could consider imposing a progressive tax (like income tax) on all renters—which would exempt poorer renters but which would make wealthier renters (who are already being subsidized by rent controls) pay for their choice to rent rather than to own. Is one of the exemptions going to be property that is vacant but listed for rent? If so, if the rent asked is higher than anyone is willing to pay, is the city going to be in the business of determining what is a “fair” rent? And “fair” for who—the poor or the wealthy? And what of an owner who is posted overseas and does not want to expose his or her house to possible damage by irresponsible tenants? And, finally, I note that the tax is “expected” to be used for development of rental housing. Is the tax to be legally segregated from general revenues to ensure that is used only for this purpose? If not, the “expectation” is that the city will be unable to keep its hands off it for other purposes.

  • Shawn Menard
    Shawn Menard
    ()
    published this page in News & Updates 2022-01-20 15:51:52 -0500

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