Vancouver is proposing a one-per-cent tax on the value of empty homes in an effort to increase the vacancy rate in the city's incredibly tight rental market.
Mayor Gregor Robertson unveiled the plan Wednesday. It would become the first of it kind in Canada if approved by city council.
All homeowners in Vancouver would be required to self-declare whether a property is their principal residence where they receive mail and file their taxes.
Homes that aren't principal residences and aren't rented out or exempted for a number of other reasons would be taxed on the assessed value. That means a $1-million home would be taxed $10,000.
A building stands at the Millenium Water condominium complex, which was formerly the 2010 Winter Olympic Village used to house athletes in Vancouver.
Robertson said the main goal of the tax was not to raise revenue but rather to encourage owners to rent out their properties in a city with the lowest rental vacancy rate and highest rents in Canada.
"We are in a housing crisis here and we need to take action," he told a news conference. "People are feeling squeezed on all sides."
A city-commissioned study in March found at least 10,800 homes were sitting empty in Vancouver for a year or more, most of them condominiums. More than 22,000 homes were unoccupied or occupied by temporary residents on census day in May 2011.
"It's absolutely unacceptable for all that housing to be treated as a commodity first, as a business holding, when housing is in such short supply," Robertson said.
"We are in a housing crisis here and we need to take action."
The province passed an amendment to the Vancouver Charter in July allowing the city to create the tax. Staff have consulted with the public, met with local experts and sought input from cities around the world with vacancy taxes, including Paris and Jerusalem.
The proposal is set to go before council next week and staff hope to have the tax in place for the 2017 year, with the first payments expected in 2018.
Robertson stressed that most homeowners, including snowbirds, would not have to pay the tax.
The tax would be levied on non-principal residences that are left empty for six months out of a year or longer, but staff have proposed eight exemptions.
Some exemptions to the tax
The exemptions include: properties under renovation or construction with valid permits; homes that are empty because the occupant is getting medical care or has recently died; condominiums that are subject to existing strata rental restrictions; and properties that the owner uses for work purposes for six months a year but claims principal residence elsewhere.
As for enforcement, the city is proposing to audit homeowners on a targeted and random basis. Owners would be required to provide evidence such as a B.C. driver's licence, medical services card or vehicle insurance that proves the home is their principal residence.
Owners would be able to appeal, and the city would establish a vacancy tax review office to handle complaints filed by owners who claim the tax has been applied to their property in error.
Penalty for failure to pay tax
Homeowners who fail to pay the tax would face a five per cent late payment penalty. If they still haven't paid by the end of the year, the outstanding balance would be added to their property tax account and accrue daily interest.
Those who fail to declare the status of their property by the second business day in February would see their units deemed vacant.
Anyone who makes a false declaration could be prosecuted by the city with a maximum fine of $10,000 per day of the continuing offence.
It will cost $4.7 million through the end of 2018 to set up the tax, with an annual cost of $1.5 million after that. But the city expects tax revenue to cover the costs, with some money left over for affordable housing initiatives.