Residents scramble to avoid Vancouver’s vacancy tax

TheGlobeAndMail.com
April 11, 2017
Frances Bula

Russell Blackburn can’t believe he is about to be hit with a $16,000-a-year tax on his condo in Coal Harbour.

He was born in New Westminster, raised in Burnaby. He got his medical degree at the University of B.C. He’s a Canadian citizen. And he spends almost six months a year at his place in Vancouver.

If he were working here, he’d be exempt from Vancouver’s new vacant-home tax. But he’s retired and so his six months a year in the city doesn’t qualify him. There’s no way he would consider renting out his $1.6-million apartment, filled with his artwork and valued personal possessions.

So Mr. Blackburn, as with many others, is being told that, yes, indeed, he is now considered the owner of a vacant home in Vancouver and he will have to pay the tax.

“In the end, it looks like I’m caught,” said the unhappy Mr. Blackburn, who has spent most of his working life in Berkeley, Calif., where he lives the other part of the year with his partner, who still works there. “Why are they discriminating against people who don’t work? Why are they penalizing me?”

Mr. Blackburn is one of many whose calls are flooding the offices of local lawyers, accountants and realtors these days, as well as the city’s 311 line as the deadline draws near for them to rent out or sell their properties to avoid paying the vacancy tax on their 2018 bill.

The city, in an aggressive move to ensure that no one comes to them next year saying they didn’t know anything about the new tax, is sending out a heavy barrage of warnings through the mail and social media this month reminding owners that, if they don’t have their unoccupied units rented out by July 1 of this year, they’ll be paying the vacancy tax next year. That will be the equivalent of one per cent of the property’s assessed value, on top of whatever usual city taxes are charged.

The city’s general manager of community services said City Hall is still getting a lot of phone calls from people who can’t quite believe the tax will be applied to them.

“As they get walked through, it dawns on them that it does apply,” Kathleen Llewellyn-Thomas said. “But they just can’t get their head wrapped around it.”

She said staff go through a set of questions with them to establish what their status is and end up having to tell them, “It will be taxed because you’re not living here.”

People who have their Vancouver home as their principal residence will not be charged the vacancy tax, even if they spend six months of the year vacationing in Mexico or Southeast Asia. If asked, they’ll need to prove it’s a principal residence by showing that their driver’s licence, health-care card, or income-tax returns are registered to that address.

People who can demonstrate that they work in Vancouver, even if they are here only part-time and have a principal residence elsewhere, will be exempt. So will people who can prove that their strata council won’t allow them to rent out their unit. (Mr. Blackburn is out of luck, again, on this one because his council’s only limitation on rentals is that they have to be for six months at a time.)

Ironically, people who spend just as much time in Vancouver as snowbirds, but who don’t have their Vancouver property listed as a principal residence, will have to pay the tax. So, someone who lives in Vancouver for the spring and summer and spends the winter in Taiwan may be subject to the tax, depending on what documentation they have to show whether Vancouver is their main home.

Realtor David Hung, who works with the firm Engel & Volkers, said the impending tax is causing a lot of consternation among clients who have bought from him.

“Many are calling the city, lawyers, accountants. It’s definitely frustrating. And for a vast majority, it’s not about the money. It’s the feeling of not being welcome.”

He said about half the people he hears from are people who were born and raised in B.C. and now live in the United States or Europe. The other half are buyers from Asia, some of whom are partway through the immigration process.

“They want to come here and integrate.”