What is the Vacancy Unit Tax?
Vacant Residential Unit Tax is a tax on vacant residential units and is levied according to theVacant Unit Tax (Regulation No. 2022-135).
What is the purpose of the Vacant Unit Tax?
The vacant residential unit tax will encourage landlords to maintain, occupy or rent out their properties, thus increasing the housing supply. This is one of the tools the City of Ottawa is using to address the affordable housing crisis in the City of Ottawa and proceeds from this tax will be used to support affordable housing initiatives.
What is the definition of a vacant unit?
A residential unit is considered unoccupied if it has been unoccupied for a total of more than 184 days during the previous calendar year.
What properties are eligible for STV?
All properties classified as Residential (Class RT) that contain six units or less and that have an eligible property code as defined in the regulation (Exhibit “A”).
Does the SUT apply to vacant land or lots that have been subdivided but not developed?
No, the tax on vacant units only applies to land with residential units and properties that have been assessed by MPAC under one of the eligible property codes, as defined in Exhibit "A" of our bylaws, which can be foundhere.
MPAC assesses vacant land under development as soon as the occupancy license is issued. Supplemental property invoices are issued once the city is informed of the updated MPAC assessment. The properties will be eligible for the VUT in the year following the issuance of the complementary invoices.
How is VUT calculated and collected?
The SUT is calculated as a percentage of the property's appraised value.
The board approved a tax rate of 1% of the appraised value of a property as determined by the MPAC. For example, this would result in an SUT tax of $4,150 per residential unit with an appraised value of $415,000. For more information on property valuation, visitTax information and property valuations.
The City of Ottawa's 1% SUT rate is in line with Toronto and Hamilton, which are implementing similar vacancy tax programs. It is considered punitive enough to encourage behavior change, but not so high as to result in non-compliance.
Properties determined to be vacant will be charged the vacant unit tax on their final property tax bill due in June.
How will STV income be used?
All STV net proceeds will be reinvested in affordable housing initiatives in the city of Ottawa. Capital investments are needed to support the construction of up to 500 new affordable and supportive units annually, under the city's 10-year Homeless and Housing Plan.
When will I have to make the declaration?
Returns can be filed from January onwards and must be completed before each year's provisional tax due date. For 2023, the deadline is March 16.
Late returns will be accepted through April 30th and are subject to a $250 late payment fee. In 2023, the late payment fee will be eliminated to give residents more time to complete their return.
How do I complete my return?
Homeowners can complete their return online at Ottawa.ca/VUT using their registration number and access code included in the November and January VUT notice. You can also find your registration number and access code at the top of your property tax bill. You can also complete your return online using your MyServiceOttawa account through the property tax service.
City Hall has filing options for those who need accessibility-related support or who are unable to access the Internet. Beginning in January 2023, residents can call 613-580-2444 to complete their phone return or schedule an in-person appointment.
I own more than one residential property; Do I need to make more than one declaration?
Yes. A declaration must be submitted for each residential property registration number.
There is more than one owner of my property; Each of us needs to send a
No. Only one declaration is required for each residential property.
What happens if I make a mistake or forget to report something when filling out my return?
If you made a mistake or forgot to fill in something, you can file a new declaration until April 30th. After April 30th, you will need to file a Notice of Complaint to request a review of your return. A Notice of Complaint can be submitted online by visitingwww.ottawa.ca/VUT.
What happens if I don't turn in my statement by the due date?
Declarations are required. Properties that have not been declared will be considered vacant and VUT will be charged to your final property tax bill.
I own a duplex/triplex/quatriplex/fiveplex/sixplex, do I have to file for each unit?
Yes. You can submit the status of each unit you own on the same declaration form. The city uses the MPAC property code to determine how many units are contained in a residential property.
Why can't the city use water or water usage data to determine which properties are vacant?
Hydropower and water usage data is protected by privacy laws and cannot be used to determine vacancy. Furthermore, hydropower and water use data would not accurately indicate how the property was occupied. For example, if a property was a primary residence with little use due to travel, work contracts, extensive renovations, military assignments or education.
I'm a snowbird, or I'm out of the country for work for an extended period, will I have to pay tax?
No. If the property is your primary residence the tax does not apply, however you must complete a property declaration. If a declaration of ownership is not completed, the property will be considered vacant.
A principal residence is defined as a residential property where a person normally resides, makes his home and conducts his daily affairs. It's the property where they receive their bills, tax returns, vehicle registrations, and other similar correspondence. A person can only have one primary residence.
My property contains a "grandma suite", do I need to report two units?
No. "Granny" suites or accessories do not require declaration. The city uses the MPAC property code to determine how many units are contained in a residential property.
Will my statement be audited?
All ownership claims may be subject to audit. If your statement is selected for audit, a City of Ottawa official will contact you to request supporting documentation. If the SUT is determined to apply to your property, you will be charged.
Providing false statements or false information can result in statutory fines of up to $10,000.
What can I do if I disagree with the audit's decision?
If you disagree with the audit's decision, you have 90 days to submit a Notice of Complaint. A claim notice can be submitted online by visitingwww.ottawa.ca/VUTand accessing the Notification of Complaint form.
How can I submit a Notice of Complaint?
A claim notice allows a homeowner to dispute the city's Vacant Unit Tax charge. After April 30, 2023, residents may file a Notice of Complaint (NOC) by September 15, 2023, where city staff will review the SUT applied to the listing. If the property is declared as a primary or occupied residence, the SUT and any related interest rates will reverse.
What can I do if I disagree with the decision in my Notice of Complaint?
If you disagree with the decision made in your Notice of Complaint, you have 90 days to file a formal request for an appeal. Please note that you cannot submit an appeal request if you have not received the results of a Notice of Complaint.
How do I pay VUT?
If your property is deemed vacant, the SUT amount will be added to your final tax invoice, which is due in June and must be paid by the final invoice due date.
I am on a monthly pre-authorized debit plan, what happens if I am charged VUT?
The SUT amount will be added to the remaining balance in your account and then distributed among your remaining payments from July to October. Your property tax payments for the following year will be calculated using city tax only, not including VUT.
My mortgage institution pays my property tax bill, what happens if they charge me VUT?
Contact your mortgage institution to determine if they will pay the SUT on your behalf or if you must make a separate payment.
Is the SUT a form of negative option billing?
SUT is a tax, not a negative option charge.
The Negative Choice Federal Billing Regulations apply to financial institutions, not municipalities. Regulations made by the Federal Banking Act and other federal laws apply to financial institutions, not municipalities.
Negative option billing applies to "consumer transactions", not taxes prescribed by Municipal Law. The Municipal Law establishes the rules and authorizes the tax powers of the Municipalities.
Finally, Part IX.1 of the Municipal Act (Optional Tax on Vacant Residential Lots) authorizes a Municipality to collect a tax per vacant fraction subject to being designated as a Municipality that can collect the tax.Reg. O. 458/22designates Ottawa as a municipality that can collect the vacant unit tax.
What are the costs associated with this VUT program?
NoMarch 2022 Report for FEDCO, Assuming 0.5% of qualifying properties are subject to the 1% tax, which would generate an estimated revenue of $33 million raised in the first 5 years. Estimated program costs are $8.2 million for personnel administration, billing, printing, communication, auditing, and dispute resolution. This results in net income of $25 million in the first 5 years.
What other counties use a Vacancy Unit Tax to manage vacancy rates?
The team conducted a robust benchmarking exercise on this tax around the world.
Vancouver's Empty Home Tax has been in effect since 2017
Toronto passed a tax on vacant residences starting in 2023
Hamilton currently has provincial approval to implement a new, vacant home tax and is developing its framework.
The Peel region has submitted a report to the regional council analyzing the feasibility of a vacancy tax.
The team also reviewed vacant residential unit tax regimes globally to determine best practices in implementing a successful vacant residential unit tax regime, including the cities of Melbourne, Oakland, Los Angeles, Paris and the Republic of Ireland.
Why must all eligible homeowners file?
The team reviewed several vacant residential unit tax regimes globally to determine how the vacant residential unit tax was implemented. Schemas use one of three different methodologies:
Voluntary Declaration of Vacant Unit: Owners would voluntarily declare vacancy in good faith and would be taxed by City Hall.(Video) What is the City of Ottawa Official Plan?
Based on Complaints: Vacant properties would be identified through a complaint or suggestion from residents.
In all cases, the regimes that used the Voluntary Declaration of Vacant Units or the Reclamatory Method have been ineffective in capturing vacant units and reducing Vacancies in the Municipalities. By comparison, those using mandatory disclosure have had much more success. These three options were included in the vacant housing unit tax survey sent to residents in 2021. Survey responses showed that residents favored mandatory annual reporting over the other two approaches.
For more information, see the "What We Hear" survey results on pageVUT reportpresented to the Board on June 9, 2021.
Why are returns required annually?
Declarations are required annually to ensure the SUT is applied accurately and reflects any changes in how the property has been used. The city has no reliable method of ensuring that all property occupancy changes are captured.
What were the key milestones in the development of the Vacancy Unit Tax program?
These are all key dates that have occurred over the past two years in connection with our Vacant Unit Tax program.
The Board filed a motion to consider a vacancy tax on December 9, 2020
Public opinion poll (announced through property tax bill) February 22 to March 31, 2021
Written public submissions from February 22 to March 31, 2021
Initial conversations with stakeholders March 15 to April 15, 2021
Initial Structure Report to the Board June 9, 2021
Ongoing discussions with stakeholders October 27, 2021 to January 26, 2022
Vacant Unit Tax Report to the Board Approved on March 23, 2022
Statute approved on May 11, 2022(Video) 2 Ottawa Avenue - Complex Tour | 1600 Sq Ft, 2 Bedroom 2 Bathroom Unit
Statute effective January 1, 2023