Ottawa’s New Vacancy Tax

Ottawa's New Vacancy Tax

Written by David Mejia Monico

August 23, 2021

The City of Ottawa is ready to charge a one percent tax since City Council approved a plan to tax vacant homes on June 9th, 2021, after being endorsed by the Finance and Economic Development Committee on June 1st, 2021. The tax will be levied on property owners’ vacant and non-primary residences including single-family homes, semi-detached homes, duplexes, triplexes and residential condominiums.

The framework for the Ottawa vacancy tax plan is proposed to be implemented in 2022 and will be introduced in 2023. The framework excludes residential rental housing from being taxed and will apply to homes after six months of vacancy. Properties on the market for rent or sale will also be excluded from the tax. The vacancy tax will be included in the homeowner’s final property tax bill if a unit were to be unoccupied for more than 184 days of the year. If the framework was to be passed in its current state, homeowners in Ottawa would have to sign a declaration document sent by the City once a year, stating whether the units they own had been sufficiently occupied.

The concept of a vacancy tax is often thought of as a way to incentivize long-term property owners to rent out their real estate to residents instead of using them as short-term rentals or having them sit vacant for price speculation. The strategy of having a vacant home tax has been implemented in multiple North American cities like Vancouver, British Columbia and Oakland, California and is also being proposed in Toronto, Ontario. Ottawa is following the City of Vancouver’s lead on vacancy tax policy after the city has seen some success with its policies since their implementation in 2017. The vacancy tax program in Vancouver has collected a total of $84.8 M from 2017-2019. Out of the total revenue generated, $10 M was spent on the program’s expenses and $61.3 M went to supporting affordable housing initiatives in Vancouver, with the rest of the revenue being allocated for future affordable housing projects.

A report by the Finance and Economic Development Committee indicates that the City of Ottawa could levy the tax on an estimated 307,000 eligible homes and expect to generate roughly $6.6 M from an estimated range of 760 to 3000 vacant properties in the first year, followed by $29.4 M over the next 5 years. The City of Ottawa could allocate the revenue collected similarly to Vancouver by spending funds on land acquisition, capital grants for new construction, development opportunities and increasing affordable housing staff capacity. The strategy of imposing a vacancy tax is likely a trend that many other cities will utilize to increase housing supply.

You can read the Finance and Economic Development Committee Report on the Residential Vacant Unit Tax for the City of Ottawa here:

Residential Vacant Unit Tax (ottwatch.ca)

 

References

Committee backs scheme for new residential vacancy property tax | Ottawa Citizen

City Council approves one per cent tax on vacant homes in Ottawa | CTV News

Vancouver empty homes tax nets another $39M as number of vacant properties drop, city says – BC | Globalnews.ca

Empty Homes Tax Annual Report – January 1, 2019 to December 31, 2019 (vancouver.ca)

Service Ottawa

Residential Vacant Unit Tax (ottawa.ca)

Empty Homes Tax Annual Report – January 1, 2019 to December 31, 2019 (vancouver.ca)

Empty Homes Tax | City of Vancouver

David Mejia Monico

David Mejia Monico

Student Intern

August 23, 2021