On November 25, 2020 City Council directed City staff to increase the Empty Homes Tax (EHT) rate to 3%. The rate will remain at the original 1.25% for the 2020 tax reference year. Properties deemed empty are subject to the tax on their assessed taxable value. Keep reading to learn more about the EHT tax rate and what it means for homeowners and renters!
MOTIVE BEHIND THE EHT
The motive behind the EHT is to encourage homeowners of vacant properties to place empty homes on the market as long-term rentals. Council is standing up for renters by raising the tax rate in order to increase the housing supply of rental properties in the city. Many homes currently remain empty the additional increase in the EHT tax will hopefully motivate owners to finally put these homes on the rental market.
HISTORY OF THE EHT
The EHT launched in 2017 and since then has been raised twice. In 2019 the rate was raised for the first time from 1% to the current rate of 1.25%. From the initial 1% rate the EHT will have tripled by 2021 at the new announced 3% tax rate. Vancouver home owners are required to submit a declaration each year to determine if their property is subject to the EHT. Council has approved a one-time extension for late declarations for the 2017 and 2018 vacancy reference periods to December 31, 2020.
Net revenues from the tax are being reinvested into affordable housing initiatives. Since 2017, $61.3 million of net revenues from the EHT contributions have been provided to Vancouver’s affordable housing initiatives. Revenue collected was first used to cover the one-time implementation costs of $7.5 million and estimated annual operating costs of $2.5 million. Since the tax was implemented in 2017 the number of vacant properties has decreased by 25%.