Sunday, April 30, 2017

Opinion: Is the empty homes tax based on jealousy? Vancouver Courier April 27, 2017

     Last week I made a terrible mistake. I decided to follow up on a message from a concerned Courier reader regarding a recent City of Vancouver policy.
     This time it wasn’t about two suites in a small duplex building that the city had determined were illegal following a complaint from a neighbour.
      Nor was it a complaint from the builder who had been previously told to add a larger bathroom on the main floor of a laneway house since the upstairs bathroom was not accessible to someone in a wheelchair.
      Nor was it from the Dunbar resident who was told by city officials that she could not build the size of house she had hoped to build because of new city zoning regulations.
      This reader’s concern had to do with the city’s new empty homes tax and its unfair application for those who chose to keep a second home in Vancouver.  Like most Vancouver homeowners, she had received a flyer from the city asking, “Do you own an empty or occasionally-used home in Vancouver?”  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.”
     This reader had owned a small, second home in Vancouver for years. She and her husband used it whenever they came into the city for a night out or to visit children and grandchildren. They also stayed there whenever they came into Vancouver for medical reasons. They also made the apartment available to family and friends visiting Vancouver.
     She told me she had contacted me because of an earlier Courier column I had written about the plight of a well-to-do Florida resident who complained that because he only used his apartment five months a year, he might have to pay an ‘Empty Homes Tax equal to one per cent of the assessed value. This was more than three times his annual property taxes that he happily paid even though he didn’t send children to our schools or place demands on municipal services.
     However, he was not at all happy about this tax. Nor was this other reader. She wondered why the city would impose a penalty on someone who owns a home which was not vacant, and impossible to rent on those days and weeks when it was not being used. How was this going to add to the available rental stock, she wanted to know.
      I told her to contact the city and she said she did. However, the only person who responded was Elizabeth Ball who told her she didn’t vote in favour of the tax. She also told me she was not alone. She was aware of many others who had kept second homes in Vancouver for years, so they could continue to enjoy the city after moving away to the interior, or in her case Tsawwassen.
     I had to agree with her concerns. While I have publicly questioned the appropriateness and likely effectiveness of this tax as it related to truly empty accommodations, for the life of me I couldn’t understand why the city would tax a home that is being used.
     Unless of course it wanted to show some empathy with those who are struggling to afford to buy or rent just one home.
     I decided to go to bat for her and everyone else who owned a second home in Vancouver and was troubled by this very unfair tax by writing an op-ed in the Vancouver Sun. I also linked it to my Facebook and Twitter accounts. What a mistake.
     While I did receive some thanks and compliments on the column, they were grossly outnumbered by those who wondered why I would side with those who owned two homes in a city with a severe housing crisis.  Did I not care about them? Who paid me to write this?
      The fact is, no one paid me to write the column. I just thought it was important to speak out against a tax that seems to be based more on jealousy, as one of my Facebook friends put it, than a genuine attempt to increase the supply of rental housing.

To those who don’t own a second home, let me conclude by asking, do you have an unoccupied suite in your house, or an empty bedroom?

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Tuesday, April 25, 2017

Responses to my Vancouver Sun op-ed on so-called Empty Home Tax

I have received many positive responses to my op-ed on what most reasonable people consider the unfair and somewhat incomprehensible aspects of Vancouver's Vacant Home Tax as it relates to those who keep a second home in Vancouver that is not vacant, investment property. Here are excerpts from just a few. (In some cases names and places have been changed to protect anonymity.)

I do hope the senior city officials and politicians who supported this tax will reconsider at least this aspect of the tax.

Let's start with this exchange between two friends on Facebook:
PB Well written. The city has imposed nothing more than a new head tax. It's a penalty and as you said, will do absolutely nothing to add more units into the rental market.

DF It's a dumb and likely ineffective tax for sure but the whole point is to force more units on to the market. I know a lot of my friends in Vancouver would be pretty happy penalizing those with occasionally used second homes, unfair or not. So I'm not sure they would change their mind given they can't afford to own even one property.

PB I think most agree that in all probability very few (if any) homes/condos will end up as rental properties. Laws (especially tax laws) should never be based on jealousy. Do we not realize what type of slippery slope this is.
Some other comments on the Vancouver Sun website and received by email.
  VG I work as a pilot and am away from home due to work more than 6 months of the year. I can't rent out my place short term legally to cover the days I am away, and if I did 30 month minimum I am unable to have a home when I am off of work. Anyone who works as flight crew is in the exact same position. Short term is the only thing that works for me and I am happy to do it. This rule hasn't been thought through and the 90 day limit the city of Vancouver is proposing to fill this isn't enough to cover this loop hole in empty homes.
IE I know people that own second homes in Coal Harbor ..Even if they could be rented, they would need to be rented for a min $10,000+.. to cover monthly expenses, how many people can afford those kinds of rent?

PB Thank you to the author for raising this point.  This unfair tax will not increase the rental stock because as is pointed out, many of these homes are not empty year round. How does it help a local Vancouverite if some condo in Coal Harbour gets rented out for 30 days at a time, not necessarily consecutively?

This is just politicians trying to appear to be doing something, which ultimately won't work.

From MM:

Greetings! - it has been some time since I last touched bases with you but we do follow you through various media channels especially with your commentary on the Vacant Home Tax being implemented by the City of Vancouver. We are caught in the web and dilemma.  We own a condo in FalseCreek and have done so for the last 12 years - a carryover from when my wife worked in Vancouver for a couple of years.  Our condo is not really vacate - we use it about every 6-8 weeks as well members of our family stay there on occasion as have a grandchild in Vancouver.  We now have received notice of the need to declare our position with the condo.  It is not our primary residence and we do not rent out what we treasure as a very special place that we worked hard to purchase and now maintain as a contributing resident of the province.  We find the imposition of this tax quite repulsive and do not want to sell the condo to avoid paying the tax - as one of our friends who lives in Nelson has done.

Would you have any advice or guidance on how we could best proceed to protect our asset in Vancouver and not be subject to the taxation contemplated.  
From DW
Hello Michael
I read your article in today's Sun and wanted to thank you for pointing out exactly the issues I have with the empty home tax.

I am a retired lawyer, who has recently moved to Kelowna after living my entire life in Vancouver. Although my wife and I now have our principal residence in Kelowna, we keep a one bedroom condo in Vancouver for frequent visits to the city to see family, friends, colleagues and our doctors.

Earlier this month I obtained a copy of the Vacancy Tax Bylaw. Upon review I noted that the wording was flawed. The scheme provides for tax on "vacant" property. Under section 2.3 " vacant" property includes property that "has been unoccupied for more than 180 days". "Unoccupied" property is defined in section 2.2.  By definition it is either (a) a residential property that "is not the principal residence of an occupier", OR (b) residential property that is "not occupied by a tenant or subtenant for a term of at least 30 consecutive days". Subsections (a) and (b) are disjunctive, meaning a property that is not a principal residence is by definition "unoccupied" and subject to the tax whether it is rented out or not.

My sense is that this bylaw will fall flat. But even if I am wrong, I believe I have options to avoid it. For those reasons I have concluded that my interests are best served if I keep a low profile. Nevertheless, I would be interested in any thoughts you might have on overturning the bylaw.
From SR

These guys at City Hall have lost their marbles. If their intentions were Honorable maybe some consideration could be given . But as in the 15% foreigners tax, the numbers do not add up. With the slow down in buying , the buyers tax revenues will be substantially lower this year and there will be a void to fill.
I am not sure what they are on to and how they will define the proposed empty home and for that matter police it. Most of the properties that they are attacking will be at the high end as you noted and renting them (if possible) will do little to help the middle and low ends that need homes. If an owner is concerned at the situation and decides to sell , who sets the price (other than the market) and in what time is he required to complete. Will he be fined for an empty house while on the market?

A lot of people are like me. They have lived some 25-40 years in the same property , have paid off any mortgages they may have had and look to retirement with possible a second residence in the sun (this year badly needed). Some years they may not be 180 days in their homes but spend time at least time monthly to keep in contact with city, bills and friends. Makes it difficult to rent if you or some of your family are spending time almost every month in this residence.

By the way what is the definition of a principal residence by city standards?

How is the City going to police ?. Turn neighbours onto neighbours ,  hire a special policing staff at additional cost ?Might end up like commuters in San Fran who opted to take the high speed lane by using blow up mannequins. Maybe people will leave lights on with a couple of these types sitting by the window.

The solution to housing affordability in Vancouver is to speed up the permit stages and encourage rental through bonusing. Also, we should not just focus on Vancouver.  We should have a more defined regional plan for development tied to transit.

Why should people who have been good citizens and who have based their retirement strategies on a reasonable amount of travel etc be penalized. If taxes are low as discussed ,maybe that is the answer along with focus on new construction . If not, people away from their Vancouver residence over 180 days will probably stay more at home ,thus taking supposed product away from the city inventory. 
What will have been achieved except adding insult to such people and you can guess who they will vote for. This is all about politics and therefore it's time for a change at City Hall. That's my RANT for the moment. Best regards Sid.

I welcome further comments.

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.
     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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