What is it?
As of January 1st 2023, The City of Ottawa requires all eligible property owners to declare the vacancy status of their homes. A unit is 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. The Annual Tax Rate indicates that the rate of the Vacant Unit Tax is 1% of the Taxable Assessed Value of the vacant Residential Property and is charged on that value.
For multiple residential units assessed under one taxable assessed value, the Vacant Unit Tax is prorated based on the number of vacant residential units in the property divided by the total number of residential units in the property. In the event an owner does not declare the vacancy status of their property, a property can be deemed to be vacant. Failing to declare the vacancy status of an eligible property may cost a property owner an administrative fee.
Does the Vacant Unit Tax apply to my property?
The Vacant Unit Tax (“VUT”) applies only to properties in the residential tax class (excludes commercial, industrial and multi-residential properties). A questionnaire is provided by the City to help residents determine whether the Tax applies to their property.
Property code(s) under Schedule A of the Vacant Unit Tax by-law define which properties are subject to the Tax. Property owners can also find their property code at the top of the second (2nd) page on all property tax bills or their Property Assessment Notice from MPAC.
Are some “Vacant” units exempt from the Vacant Unit Tax?
A vacant unit may qualify for an exemption from the Vacant Unit Tax for that Tax Year if, during the Vacancy Reference Period it was unoccupied for more than 184 days due to one of, including but not limited to, the following:
- the death of the Owner;
- major renovations or redevelopment to the property;
- Tenants or subtenants who were previously occupying the unit as a principal residence are currently residing in a hospital long term or supportive care facility;
- Transfer of 100 % of the legal interest to an Arm’s Length party;
- a court order, court proceedings or order of a governmental authority prohibits its occupancy;
- occupied for residential purposes by an Arm’s Length Tenant under a Tenancy Agreement, or by an Arm’s Length subtenant under a Sublease Agreement;
- it was used as a Short-Term Cottage Rental;
Certain conditions may apply including providing the City of Ottawa with additional proof that a declarant can claim an exemption in one of the example scenarios mentioned above.
Where and When do I submit My Declaration?
The City of Ottawa provides an online Form to help residents complete their Declaration by March 16th.
Who files the Declaration in a real estate transaction?
If a real estate transaction is closing between January 1st and April 30th: the seller must complete the VUT declaration by March 16th in accordance with the VUT By-law. It is the responsibility of sellers and buyers to make the appropriate arrangements to ensure that the VUT declaration has been filed.
If a real estate transaction closing between May 1st and December 31st: the buyer must submit a VUT declaration in the following year. Buyers may be able to claim an exemption also in the following year at the time of declaring the vacancy status for properties which are sold in the reference year.
This blog post was written by Brandon Doughty, a member of the Real Estate and Wills and Estates teams. He can be reached at 613-369-0364 or at brandon.doughty@mannlawyers.com.
