The City of Ottawa is introducing a vacant unit tax (VUT) or better known in other cities such as Toronto or Vancouver, as the vacant home tax. The Ottawa vacant home tax kicks in on January 2023 as part of an initiative to encourage homeowners to maintain, occupy, or rent their properties to increase the housing supply and will apply to non-principal residences vacant in 2022 for at least 184 days. The Ottawa vacant home tax, or VUT, can be substantial. If you own a non-primary residence in the City of Ottawa and your property is vacant for more than 184 days in a calendar year, you could face a tax liability of 1% of the assessed value of the property. The Ottawa vacant home tax would be payable on top of your existing property taxes. For example, if your Ottawa property is assessed at $1M, your vacant home tax bill would be $10,000 for the year. Beginning January 2023, most residential property owners in Ottawa will be required to declare the status of their property(ies) annually. According to the city of Ottawa, not all residential property codes are required to submit a declaration. The list of eligible properties is outlined in the by-law. To find out your property code, you can refer to your most recent Final Tax Bill. The property code can be found on the back of the bill.
What types of properties does the Ottawa Vacant Unit Tax apply to?
The VUT applies only to properties in the residential tax class (excludes commercial, industrial and multi-residential properties) that are deemed to be vacant.
A unit will be considered vacant if it was not used as a principal residence and has been unoccupied for more than 184 days in the previous calendar year.
When is the Vacant Unit Tax declaration due?
According to the city of Ottawa, Vacant Unit Tax declarations can be submitted beginning in January and must be completed by the Interim Tax due date each year. For 2023, the deadline is March 16.
Late declarations will be accepted until April 30 and are subject to a $250 late fee. In 2023, the late fee will be waived to provide additional time for residents to complete their declaration.
Which situations will be subject to the Ottawa Vacant Unit Tax?
A residential unit is considered vacant if it has been unoccupied for an aggregate of more than 184 days during the previous calendar year. The tax does not apply to, but a declaration is still required for:
- Principal Residence
- Tenanted properties
- Properties occupied by a family member, friend, or other resident using it as their principal residence
- Properties qualifying for one of the available exemptions
What happens if I do not submit my declaration by the due date?
Submitting a declaration for each property you own is mandatory. Properties which have not declared will be deemed vacant and be charged the VUT on their final property tax bill.
Further, if you are selling your property, you will have to produce a declaration for your property prior to closing.
What if I’m a snowbird and spend a few months out-of-country?
If the property is your principal residence, the tax does not apply, however you still must complete a property declaration.
A principal residence is defined as a residential property where a person ordinarily resides, makes their home, and conducts their daily affairs. A person can only have one principal residence.
How will the City of Ottawa know that my property is vacant?
It is not yet known how the city plans to inspect or enforce the status provided in the annual declaration. However, according to the City of Ottawa’s website, they may audit your declaration, asking for documentation to prove the occupancy of the property. Providing false declarations or false information can result in by-law fines of up to $10,000.
The Bottom Line
If you own a property in the City of Ottawa, keep an eye out for the upcoming Vacant Unit Tax (VUT) declaration deadline of March 16, 2023. If you have a property that is a non-primary residence that will be vacant for more than 184 days in a year, the City of Ottawa’s vacant unit tax can be substantial, so keep it in mind as you consider buying a property in the City of Ottawa.