Vancouver's Empty Homes Tax (the "EHT) was first introduced in 2017 with the intention of encouraging owners to rent their vacant residential properties to help alleviate pressure on Vancouver's rental market. Subject to certain restrictions, residential properties which are tenanted or considered a principal residence generally do not pay EHT. The current annual tax payable on a residential property declared empty under the EHT bylaw is 3% of the assessed value, unless an exemption is available.
On June 28, 2023, Vancouver City Council amended the EHT to exempt developers from paying it on completed but unsold condominiums. Developers across the City had been advocating for such an exemption, maintaining that it was beyond the scope and purpose of the EHT to require developers to pay significant tax on condominiums for which they had every intent and desire to sell but were unable to due to market conditions.
Although the new exemption applies retroactively, it is important to note that the retroactivity is limited to condominiums completed after January 1, 2022. Developers who own condominiums completed prior to this date are still required to pay EHT on those condominiums until they are sold or qualify for another exemption. Even with this limited retroactivity, the City still intends to refund $3.8 million in EHT it collected in 2022 on 60 unsold condominiums.
The new exemption will be welcome news for developers in Vancouver, as it provides sensible financial relief from what were previously quite substantial tax levies on completed but unsold condominiums.
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