BY Oliver Triskan/June 14, 2021
Canadian residents have seen housing prices increase dramatically over the past year. With these increases, affordable houses are nearly impossible to find. To remedy this issue, the city of Ottawa is deciding to implement a vacant home tax. This tax will be an extra one percent added onto owners existing annual property tax. It will only be enforced if their property is vacant for more than 184 days.
The tax does not apply for primary residences, but every homeowner must declare whether their property is occupied or vacant each year. If the homeowner fails to declare their properties status, they could be fined or have the property deemed vacant.
Based on the committees’ expectations, the tax will be implemented in 2022, with bills being handed out in 2023. According to Kate Porter of CBC, it would cost between $1.3 million and $1.7 million to run, generating between $5 million and $6 million if taxing 1,000 to 1,500 properties (Porter, 2021). The city of Ottawa has said that the tax revenue will be going towards creating affordable housing to help fix the issues at hand.
Some experts believe the tax won’t have a very large effect seeing as many of these homes are owned by foreign investors, who already pay high taxes. However, some people think it will entice individuals to put the house up for rent, earning some extra income. Based on a report by TRREB, 40% of the Toronto condo investors that were polled, said they would sell their condos if the tax is put forth (Hanrahan, 2021).
Ottawa isn’t alone in implementing a vacant home tax. Vancouver already has a 1.25 per cent tax which started in 2018, and Toronto approved a one per cent tax beginning in 2022. In 2016, there were 1.34 million empty or temporarily unoccupied homes nationwide (Somos, 2019). To address part of this issue, the Federal Government is applying a one per cent tax to non-resident and non-Canadian owned properties that are vacant or unoccupied for an extended period of time.
Officials are hoping that this tax will compel homeowners to rent the places they aren’t using, and that the revenue from the vacant home tax will generate funds to put back into affordable housing projects.
Hanrahan, L. (2021, February 17). New vacant home tax has 40% of Toronto condo investors wanting to sell. https://dailyhive.com/toronto/vacant-home-tax-toronto-condo-investors-sell.
Porter, K. (2021, June 1). Ottawa set to charge tax on vacant homes | CBC News. CBCnews. https://www.cbc.ca/news/canada/ottawa/vacant-home-tax-ottawa-preliminary-1.6048483.
Somos, C. (2019, October 2). Tens of thousands of homes are sitting vacant across Canada: report. CTVNews. https://www.ctvnews.ca/canada/tens-of-thousands-of-homes-are-sitting-vacant-across-canada-report-1.4621000.