After being asked by Vancouver city council to review the fairness and effectiveness of the Empty Homes Tax (EHT), including the feasibility of hiking the rate, city staff have returned with a report that recommends against any increases.
Since it was implemented in 2017, the EHT adds an annual tax of 1% of the property’s assessed taxable value for the properties deemed to be vacant. This was rolled out as a tool to address speculation and housing supply, and most residential properties, including homes that are principle residences or rent out for at least six months of the year, are not subject to the tax.
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There were 6,245 vacant properties in 2018, a reduction of 1,676 units from the previous year. Of the 2,538 properties declared vacant in 2017, nearly half were occupied in 2018. Data indicates 70% of properties paying EHT are condos with an average assessed value of $1.4 million, while 19% are single-family homes with an average assessed value of $3.5 million.
“At this point, based on consultation with tax experts, housing experts, the public, and other stakeholders, the tax is working mostly as intended and minimal further amendments are recommended at this time. The data also supports this conclusion with key indicators showing trends that point to the tax working to encourage occupancy,” reads the report.
Besides the already-established results of the EHT, another leading reason is how the city’s tax would be impacted by the provincial government’s speculation and vacancy tax.
“Experts also strongly cautioned that an increase in EHT rate at this stage would likely increase the potential for noncompliance and evasion, particularly for properties that are also paying the new provincial speculation tax,” continues the report.
“There was a suggestion that before increasing the tax rate, staff should consider opportunities to enhance compliance with the tax, potentially in collaboration with the Province.”
City staff are seeking city council’s approval to continue monitoring the impact of the provincial government’s tax and other measures, and reassess later as needed.