Home speculators beware! As proposed back in November 2020, Vancouver plans on tripling the vacant home tax this year. The council voted to increase the tax to 3% of the assessed value for 2021. The tax, which places a penalty on underused homes, was put in place to help encourage more efficient use. If you want to know how this will affect you, read on!
The City’s vacant home tax appears to be making a big impact, with the total number of units falling. In 2017, the first year the City had a vacancy tax, there were 2,538 homes found vacant without exception. By 2018, that number fell to 1,989, and finally down to 1,893 in 2019. When including the number of exempted homes that transitioned to tenanted use, this added over a year of housing supply. Although the low rate of, or negative, price appreciation also tends to contribute to more efficient use as well.
Why is it Tripling?
The tripling of the tax might seem like Vancouver’s politicians just have big hearts, but it may be the City getting ahead of bigger problems. The pandemic’s acceleration of work from home (WFH) and shuttering of local shops has lessened the importance of expensive urban hubs. So far this has been a big gain for the suburbs, and more affordable cities. Without more incentives, such as more affordable housing, the long-term viability may be impacted. No one wants to live in a City with expensive and hard to find housing, to be next to Starbucks, when they’re paid the same to work anywhere now.
What it means for you.
If you don’t have any vacant properties, this increase will only benefit you as the city will have more funds for city projects. However, if you have empty investment properties, this is a reminder to consider your options. A 3% tax, especially on expensive properties, can be expensive, so if you want to get ahead of the curve and sell your property, contact us and we will help you every step of the way!