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A sold sign is seen outside a home in North Vancouver, B.C. Thursday, Oct. 27, 2016. A proposed tax would see homeowners pay one per cent of the assessed value of non-principal residences they do not rent out. The tax will go before city council next week. (JONATHAN HAYWARD/THE CANADIAN PRESS)
A sold sign is seen outside a home in North Vancouver, B.C. Thursday, Oct. 27, 2016. A proposed tax would see homeowners pay one per cent of the assessed value of non-principal residences they do not rent out. The tax will go before city council next week. (JONATHAN HAYWARD/THE CANADIAN PRESS)

Vancouver to start taxing vacant homes Add to ...

Willow Yamauchi has looked at the empty house across the street from her home for 17 years. There’s never been anyone but the occasional squatter staying at the four-storey triplex.

In the meantime, she has two teenagers who, she expects, will have an extraordinarily hard time finding a place to live in the city when they are on their own as a result of Vancouver’s almost 0-per-cent vacancy rate and ever-increasing rents.

“I have empathy for the owner but it kind of seems obscene. People need homes,” said Ms. Yamauchi, who lives in Mount Pleasant.

That’s why she is one of the many Vancouver residents fully supporting the city’s move to add a hefty new tax to homes that aren’t principal residences and are left vacant for six or more months.

“I’m hoping this might be the nudge the owner needs to make a decision one way or another,” she said.

Mayor Gregor Robertson said Wednesday that city staff have recommended imposing a tax of 1 per cent of the house’s value each year.

The tax will be a first for Canada, although not for many other cities around the world where locals are getting priced out, in part because of demand by out-of-town investors.

Mr. Robertson emphasized that most Vancouverites won’t pay any extra tax, but that the city needed to take action because of the critical housing shortage. A city-commissioned study in the spring indicated that about 11,000 housing units in Vancouver had been empty for 12 or more months; around 90 per cent were condos.

“We need to make sure we’re getting the best use of homes and buildings around our city,” said the mayor. His council is also planning several other moves on the housing front in coming months, including regulations to limit short-term rentals.

He said vacant houses don’t just exacerbate a problem of rental shortages.

They also erode communities, and, he said, have become a source of concern to city firefighters lately because of the number of fires that have erupted in them.

The vacant house near Ms. Yamauchi, assessed this year at $1.1-million, would be billed another $11,000, on top of the regular $3,600 in city taxes, if the new empty-house penalty is approved by council next week.

The proposed tax appears to have strong support from residents, but opinion is far from unanimous.

The city’s consultations in October showed that only 56 per cent of owners were in favour – a sharp contrast to the 82 per cent of renters who supported the idea.

Bringing in the new tax and then monitoring the 265,000 homeowners to make sure they are not cheating the system is sure to be complicated.

The new tax, if approved, will first come due in March, 2018, after more than a year of warnings to owners about it.

Owners will be given a choice of boxes to check, indicating whether their house, townhouse or apartment is a principal residence and occupied by the owner or a family member, rented out, unoccupied but for a legitimate reason, or none of the above. That final choice means the home will be levied the special tax.

People who fraudulently declare their house is a principal residence or rented out when it isn’t may be charged a penalty of up to $10,000 a day. The city plans to audit about 1.25 per cent of all homes every year to verify its use.

Owners will need to prove it’s a principal residence by showing multiple pieces of proof that it is their permanent home or that it is rented to a long-term tenant. That could include tax forms, drivers licences, vehicle registrations, health cards, and long-term leases.

People who own a house but leave it vacant for long vacations, to go on sabbaticals, or to live temporarily elsewhere to help a family member will be exempt. So will owners who are doing renovations or estates where the house is going through probate.

As well, someone who owns a condo where the strata council currently prohibits rentals will be exempted. However, if the strata changes its policies later, the owner will be charged the tax.

Finally, a person whose principal residence is outside the city, but who owns a property and works in Vancouver at least six months of the year won’t be charged the tax.

People are still uncertain how the rules will work.

Bob de Wit, CEO of the Greater Vancouver Home Builders’ Association, said his members are waiting to find out how the new rules will apply to them.

The city’s proposed rules say the empty-homes tax won’t be applied for houses undergoing renovations once permits are issued. But builders often wait six months to more than a year between buying a house and getting the permits to renovate or rebuild.

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