CTV NEWS Ottawa, By Ted Raymond

Ottawa city council has approved a plan to impose a one per cent tax rate on vacant homes in the city.

The tax would be included in a homeowner's final property tax bill if a unit were to be vacant for more than 184 days per year. The tax would not apply to the owner's principal residence. Eligible properties include single-family homes, semi-detached homes, residential condominiums, duplexes and triplexes.

The owner of a home with an assessed value of $415,000, for example, would be charged an additional $4,150 on their property tax bill at the end of the year if the unit was considered unoccupied.

Only residential homes classified in the residential property tax class would be subject to the residential vacant unit tax. All 307,000 homeowners in Ottawa would have to sign a declaration from the city stating whether their home is occupied or not.

The new regime is expected to be implemented in 2022, with billing to begin in 2023.

A report prepared for the finance and economic development committee (FEDCo) said the new tax would generate about $6.6 million in its first year, based on an assumption of 1,500 vacant units. Staff said the tax is not meant to be a major revenue generator; rather, the tax is meant to increase the available housing stock in the city.

However, speaking before the vote, Mayor Jim Watson said the additional revenue could also help fund affordable housing.

"There's no question that this is going down an uncharted path," Watson said. "At the end of the day, it has the potential to bring millions of dollars into the city that will go directly back into affordable housing projects, new builds and renovations."

Staff estimate it would cost $3.5 million over 2.5 years to launch the proposed program, after which the ongoing operating costs would be $1.3 million per year, funded by the revenue generated from the tax itself.

The Canadian Mortgage and Housing Corporation (CMHC) said the vacancy rate in Ottawa rose to 3.9 per cent in 2020 from 1.8 per cent in 2019, largely due to COVID-19 pandemic factors, such as lower rates of student rentals. The city says the vacancy rate in Sandy Hill, for example, rose from 2.6 per cent in 2019 to 6.7 per cent in 2020.

The city expects vacancy rates to return to pre-pandemic levels over the next few years.

With files by Josh Pringle / Read this article in its entirety on the CTV NEWS Ottawa website.

Related Reading:

Ottawa Set to Charge Tax on Vacant Homes | CBC News, June 2, 2021