Tuesday, April 25, 2017

Opinion: Vancouver's 'empty homes tax' anything but, it's neither reasonable nor fair Vancouver Sun April 21, 2017



     “Do you own an empty or occasionally used home in Vancouver?” This is the question posed by a recent City of Vancouver mail-out to hundreds of thousands of residents. It added: “If your property is not a principal residence, eligible for an exemption, or rented out for at least six months, it will be subject to the Empty Homes Tax.”
    While many applauded the mayor and city councillors who voted in favour of this tax in the hope it would bring thousands of rental units to the market as promised, many others were not clapping. They included those who questioned the appropriateness and likely effectiveness of the tax, and thousands of homeowners whose principal residence is outside of Vancouver and who, for a variety of reasons, maintain a second home in the city.
     Some are well-to-do Americans or Albertans living in Coal Harbour. However, many others are British Columbia residents requiring a Vancouver foothold to visit children and grandchildren, carry on business, come for health reasons or countless other scenarios.
     These are not empty homes. They are furnished and lived in seasonally or throughout the year. These homeowners cannot rent their homes when they are not here due to various practical considerations and, in many cases, strata bylaws. Moreover, there are other tax considerations.
In many instances, these property owners contribute considerably to the local economy. They pay annual property taxes even though they do not send their children to our schools or place significant demands on other municipal services.
     Now they must pay tens of thousands of dollars of additional taxes or face a $10,000 a day fine.
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     I realize many Vancouverites will have little sympathy for these people. After all, why cry a river for someone who owns two homes when so many Vancouver residents can’t even afford to own or rent one?
     Because this tax is neither reasonable nor fair.
     To better understand why it is unfair, imagine if the Resort Municipality of Whistler or the Gulf Islands Trust suddenly announced that everyone who owns a second home within their jurisdiction that is occupied less than 180 days a year must now rent it out for more than 180 days, with a minimum period of 30 days, or pay thousands of dollars of additional taxes annually.
     Moreover, if they do rent it out on these terms, they may have to pay substantial capital gains taxes to the federal government, calculated on the initial price paid for the property, since it is no longer a second home, but an investment property.
    Troubled by this aspect of the bylaw, I contacted a city councillor who voted in favour of it to ask why the city wanted to penalize those who keep second homes in Vancouver that are not going to be rented out. He offered this response:
     “The goal is to move otherwise empty homes into the rental market. The issue you point to is one that was well discussed in the consultation and before council. I agree it is a difficult one, but the staff recommendation is to maintain a very clear distinction and there is support for that direction. We’ll have another debate about this, I am sure, when we get the final report. These measures are driven by the extraordinary problems we see in the housing market, including the virtual disappearance of the vacancy rate for rental.”
     In case it is not clear to this city councillor, staff and other members of council, this is not a tax on “empty homes.” It appears to be a penalty on the rich or others fortunate enough to have more than one home. It will not create more affordable rental housing in the city. 
     I therefore urge city council to amend Vacancy Tax By-Law No 11674 so it will not penalize owners of legitimate second homes that are fully furnished, occupied and not likely to be rented.
I also urge others to speak out against this unfair tax before the city starts taxing your empty basement suite or unused bedrooms.
Michael Geller is an architect, president of The Geller Group and adjunct professor at the SFU Centre for Sustainable Community Development.
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