Vancouver council reverses planned increase to empty homes tax

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Vancouver council approved several changes to the city’s empty homes tax Wednesday, including cancelling the increase to five per cent approved by the previous municipal government and instead holding the tax at three per cent.

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Council also approved other changes to the tax, including creating a new exemption for unsold newly built homes, and applying that exemption retroactively to the previous tax year. This decision, supported by council’s ABC majority but opposed by the Green and OneCity councillors, means the city will forego $3.8 million in empty homes tax revenue that has already been levied on developers who own vacant, unsold homes that were empty for most of last year.

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Vancouver introduced the empty homes tax in 2016 as a way to encourage owners of empty or underutilized residential properties to sell their homes or rent them out. The tax rate, first implemented in 2017, was set at one per cent of the home’s assessed value and has since been increased three times.

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The tax increased to 1.25 per cent in 2020, then three per cent in 2021, and then in April 2022, Vancouver’s previous council under then-mayor Kennedy Stewart approved a motion to increase the empty homes tax from three to five per cent for the 2023 tax year, and directed staff to report back on how exemptions might be altered to improve fairness.

Staff presented that report back to council this week, which included the recommendation to hold the tax at three per cent instead of increasing it to five per cent. The staff report cited analysis conducted by external consultants EY, which suggested “large increases to the rate could cause a spike in false declarations and concurrent need for audit resources.”

Council also unanimously directed staff to report back on a “graduated tax rate scheme,” where properties vacant for a single year would start at a lower rate, which would increase if the property is empty for consecutive years.

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The non-ABC councillors opposed cancelling the planned increase to the tax, and applying a retroactive exemption for developers owning unsold empty residences. Both of those measures passed with the support of the ABC majority.

The rest of the measures — including a series of changes around exemptions and late penalties — passed unanimously.

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