Do I Have to Pay the Empty Homes Tax If I Live in Surrey?

In recent years, Vancouver has faced a severe shortage of rental properties, and the lack of supply was driving up rental prices to unprecedented heights. The Empty Homes Tax was created to counter the problem with rental housing in the city of Vancouver.

Since the implementation of the Empty Homes Tax, vacant properties in the city have been on the decline. If you are living in a neighbouring municipality such as Surrey, you may be wondering if you will be affected by the Empty Homes Tax. The good news is that you will not be subject to the Empty Homes Tax if you live in Surrey. Let’s learn more about the Empty Homes Tax and to whom it does and does not apply.

Vancouver’s Empty Homes Tax

Vancouver’s Empty Homes Tax is an annual tax charged at a rate of five per cent of the property’s assessed value. It was created in 2017 to reduce the number of empty homes in Vancouver and return vacant, under-utilized properties to people who live and work there. From 2017 to 2019, the tax rate was one per cent of a property’s assessed taxable value and began increasing in 2020. As of June 7, 2022, the tax rate has been set to five per cent for 2023 and onwards.

BC Assessment uses a Property Tax Equation to determine the assessed value of properties in BC. They determine the value based on the valuation date of July 1 of each year. In January, owners receive their assessment notice containing the assessed values used to calculate the annual property taxes.

Unlike the Speculation and Vacancy Tax, the Empty Homes Tax affects anyone who owns a Class 1 Residential Property in the City of Vancouver, regardless of the type of house. A Class 1 Residential Property is defined as single-family residences, multi-family residences, duplexes, apartments, condominiums, nursing homes, seasonal dwellings, manufactured homes, some vacant land, farm buildings, and daycare facilities.

Exemptions to the Empty Homes Tax

The Empty Homes Tax applies to all residential properties that were not a principal residence or rented out in the last six months of the year. However, even if the property has been vacant for more than six months, a property could be exempt from the tax under any of the following conditions:

• Court order – The property is under a court order prohibiting occupancy.
• Strata restrictions – Strata rental by-laws restrict the property from rental use.
• Limited property use – The property has been deemed “limited in use” and restricted for a specific use other than residential occupancy.
• Owner in care – The property is unoccupied because the owner is undergoing medical care and is residing in a care facility (up to two consecutive tax years).
• The owner passed away – The property is empty because the registered owner is deceased.
• Under construction – The property is undergoing significant renovations or redevelopments with all necessary permits approved.
• Leased land – Class 1 Residential leasehold lands must be occupied the same way non-leased land would be to be exempt from the tax.

What the Empty Homes Tax means for homeowners is that a listed property is not exempt from the tax solely because it is on the market, but it will be exempt if there is a transfer of legal ownership during the tax year.

Homebuyers can request a copy of the property status declaration from the sellers in the Contract of Purchase and Sale document, as well as a Vacancy Warranty that confirms the property has not been vacant for more than six months during the current or prior year.

Owners Affected by the Empty Homes Tax

The Empty Homes Tax only applies to Class 1 Residential properties within the City of Vancouver. If a property is in a municipality that does not fall within the city of Vancouver, the tax will not apply. This is good news for Surrey’s residents since the tax is not used within their municipality.

Surrey and the Empty Homes Tax

If you are looking to buy or sell a home in the municipality of Surrey, then rest assured that you will not be affected by the Empty Homes Tax. However, buyers and sellers within the City of Vancouver need to be careful that they are taking the necessary steps regarding the Empty Homes Tax.

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