Giant condo buildings in Coal Harbour tower over a park in Vancouver.
RICHARD LAM / PNG
Vancouver city staff want to look at changing the city’s empty homes tax, the first of its kind in North America, and that could mean increasing the tax or charging a different rate for foreign owners.In a report before council this week, city staff seek council’s approval on immediate bylaw amendments to “improve the effectiveness of the empty homes tax,” and to move ahead with further review and consultation on additional changes, including changes to the tax rate.The tax, a levy of an extra one per cent of the property’s assessed value for the year, targets homes that are empty or only used part-time. With Vancouver’s rental vacancy rate remaining close to zero for several years now, the primary purpose of the policy, the city said, was to encourage increase the number of units available for rent.The first year of the empty home tax is expected to generate $38 million in gross revenue, most of which the city has already collected. But, the staff report says, “While this money will be spent on affordable housing initiatives, the desired outcome of the EHT was conversion to rental use, not revenue generation. Given the number of property owners that chose to pay the tax instead of renting their property, it is possible that the current tax rate is not enough of an incentive to rent.”The city recommends “a number of different options for increasing the rate be analyzed and considered,” including different rates for Canadian residents and foreign owners, different rates for different categories of residential properties, and rate increases based on the number of years a property is left vacant.The staff report also asks council to approve bylaw amendments to improve the tax. One recommended change seeks to prevent owners of empty homes from evading the tax through a method the city’s auditors discovered.The report says the city’s empty-home tax audit process “identified the potential for situations where an owner might attempt to avoid paying the tax on an un-occupied second home by entering into a rental agreement with a corporation (which they might own) or a family member or friend, without the property actually being occupied as a long-term rental property.”“This is a potential unintended opportunity for property owners to avoid paying the tax that Staff recommend closing for the 2019 tax year,” the report notes, although it does not indicate how many, if any, property owners previously exploited this “unintended opportunity.” The report recommends bylaw amendments to ensure the “permitted occupier” actually uses the property as their principal residence for at least half the year.No one from the City of Vancouver was available for an interview Sunday.If council approves the recommendations in the report, staff will report back to council on the review of the empty homes tax rates in fall 2019, including recommendations for public consultation on the proposed firstname.lastname@example.org/fumano