As you have probably heard, The City of Vancouver this past year implemented a tax on vacant properties. The tax is 1% of the properties assessed value. There are several exceptions and provisions within the new regulations, but generally speaking if a residential property is your principal residence where you live or has been rented for the past 6 months it will not be subject to this tax. We are coming up to our first declaration for this tax, and that being said all home owners must make a declaration by February 2nd, 2018 or it will likely be deemed to be vacant, and subject to the tax. This goes for those looking so sell/move as well, it is best to complete the declaration to avoid a potential problem or dispute.
City of Vancouver Empty Homes Tax is Now A Reality
The challenge we, and our Lawyer/Notary colleagues see for clients is that this tax (like property tax) runs with the property and the current registered owner (unlike income tax or sales tax specific to an individual or transaction). The problem is the City can potentially review up to two years following a taxation year, and collect the tax from the current owner if it is deemed payable. This is of specific concern for new owners property being finically responsible for a declaration a previous owner has made… a somewhat scary thought.
This all being said, there are ways we can work to reduce this exposure with research on your new prospective home, proper contract clauses, seller signed declarations, and a new title insurance product offering coverage for this exposure. The last of these may be the best way to reduce risk as of this time. We are eager to see how the City will resolve the difficult to overcome aspects within the implementation and execution of this tax.
