The B.C. Real Estate Association (BCREA) says the mortgage stress test introduced by Ottawa one…
The good people of Vancouver have until this Friday, February 2nd, to declare the status of their home. Is it occupied or … empty?
The penalty is steep if you have an empty home: 1% of the assessed value of the home on top of the property taxes you already pay. Or, to put it another way, an extra $13,320 annually on that east side teardown you bought in 2002 or an extra $5730 on that downtown 1-bed condo. It ain’t cheap to not occupy your Vancouver property for less than 6 months per year.
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Critic Michael Geller joined us to outline some of the problems he sees with the tax. And it is hard to disagree from the perspective of individual property rights. Why should the government tell me that I must have a tenant in my own property?
Consider these examples:
A hard-working couple from the interior bought a presale 15-odd years ago because their kids had moved to Vancouver. They come to the city one weekend a month to visit their kids and grandkids (who, being from Vancouver, do not have a lot of extra space for visitors!). They are now at a loss, as the way they use their Vancouver condo has suddenly become illicit.
These newly retired folks are on the hook for nearly another $7,000 per year for the “privilege” of visiting their own home. Alternatively, they can become landlords, defeating the purpose of owning their Vancouver condo in the first place, or they sell it. All they really want to do is to stay in their own home to keep up monthly visits to see their family.
Or what about the family who inadvertently bought a single-family home with a legal suite in 2016? The family of five purchased the home and have been using both levels as the family home until the Empty Home Tax.
Their situation now has changed dramatically. They have three options. The family can cut their own living space down by half and rent out the basement. Or, they can apply to the city to remove the legal suite designation, but this involves having city inspectors out to inspect the home in order to ensure that the suite no longer exists and is up to city code (potentially a very expensive process). Or, third, they can pay an extra $20,000 annually for continuing to live in their home as they have since they bought it.
There are losers from this policy and not all of them are callous multi-millionaires.
There are two sides to every story, though, and we have had more guests who support the empty home tax than not, like Economist Tom Davidoff, Abundant Housing Vancouver’s Daniel Oleksiuk, and Sociologist Nathan Lauster.
These folks all come at the problem from a different perspective: one that privileges the health of the community and the underprivileged tenant or aspiring tenant over individual owners. The empty homes tax will offset the loss in tax revenue that is not paid by folks who own Vancouver real estate but do not live, work, or pay income tax here. It will also create more rental stock and, one would assume, lower rents, while potentially leading to more homes coming on the market for sale to help cool the seemingly insatiable demand in Vancouver. The result of the tax overall will be a more dynamic and healthy city with people who work in this community able to live here, too.
This is a nice vision for a city that has experienced an unprecedented rise in the world of global real estate.
Where you fall in relation to this tax undoubtedly has to do with your age, ownership status, ideology, etc.. etc. etc. but there is one thing we should all be able to agree on: what about Kits?
Seriously….what about Kits!?!?
Okay, this isn’t really about Kitsilano but more about places like Kits or the West End or Fairview, where there are tons of older condo buildings with rental restrictions because the owners have decided that they want to control the number of – or entirely eliminate the chances of – their neighbours being renters. The owners just got together and wrote up a new bylaw.
And now, if you own an empty condo in one of these buildings, with a rental prohibition or a rental restriction that is maxed, you are good. Don’t rent it out. Don’t worry about the tax. Stay groovy.
It is easy to justify these types of rental restrictions pre-empty homes tax but why now? Why do these guys get a pass? Why is the city cracking down on the basements of single-family homes but still exempting entire buildings that long ago decided that they don’t want tenants in their building?
It doesn’t make sense and Vancouver should no longer tolerate Kits.