Ottawa City Council to Consider Final Vacant Residential Unit Tax Report this Spring
The objective of the tax, which could be implemented in 2023, is to increase the local supply of housing by encouraging owners to occupy or rent their properties.
The final report on a proposed vacant housing tax is expected to be presented to Ottawa City Council this spring.
Under the proposed framework, a residential property that is not the owner’s primary address and that is vacant for more than 184 days in the calendar year could be subject to the new vacancy tax.
The tax is designed to motivate homeowners to occupy or rent their properties, with the aim of solving the local affordable housing crisis. The net revenue collected through the tax is also expected to support the city’s affordable housing initiatives.
Vacancy tax should be calculated using a 1% tax rate applied to the MPAC’s assessed value of the property.
In early 2023, pending final council approval in spring 2022, the City of Ottawa says all homeowners will be required to complete a declaration based on their property’s occupancy status in calendar year 2022. If a property is not a principal residence, the owner will have to declare whether the property was vacant, rented or eligible for an exemption in 2022. If the period of vacancy in the calendar year exceeds 184 days, a vacancy tax will be added. to the final property tax account for 2023.
Tax exemptions are considered in the following cases:
- Death of a registered owner
- Owner of a hospital or long-term care facility
- Sale of the arm’s length property
- Specific court orders prohibiting the occupation, sale or rental of the property
- The property was undergoing renovation or extended construction
The city plans to audit returns and properties annually. Staff will need to work with owners to verify the accuracy of property status and statements. If it turns out to be false, the vacancy tax and penalties will apply.
Council approved the initial framework for the new vacant housing tax in June 2021.