Vacant unit tax

On March 23, 2022 the Residential  Vacant Unit Tax  report was approved by Council along with the  Vacant Unit Tax  (By-law No. 2022-135) on May 11, 2022.

The intention of the residential Vacant Unit Tax is to encourage homeowners to maintain, occupy or rent their properties, thereby 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 revenue from this tax will be used to support affordable housing initiatives.

The Vacant Unit Tax (VUT) will be implemented in the 2023 taxation year and apply to non-principal residences vacant in 2022 for at least 184 days.

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All residential property owners will be required to register the status of their property during the previous year; if no declaration is made, the property will be deemed vacant and will be subject to the tax.

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

Definition of a vacant unit

A residential unit is considered vacant if it has been unoccupied for an aggregate of more than 184 days during the previous calendar year.  

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. The tax applies only to properties in the residential tax class (excludes commercial, industrial, and multi-residential properties).

Eligible Properties

Eligible properties are determined using the property code assigned by the Municipal Property Assessment Corporation (MPAC). The property code can be found on the back of the bill of your most recent Final Tax Bill.

Not all residential property codes are required to submit a declaration. Review the list of eligible properties outlined in the by-law.

All residential property owners are required to submit an annual property declaration starting in January 2023, even if you are using the property as your principal residence. If you own more than one property, you must submit a declaration for each.  Eligible property owners will receive reminders to declare each year.

Tax amount

If the residential property has been declared or deemed vacant for more than 184 days in the previous calendar year and does not meet one of the exceptions outlined below, then the Vacant Unit Tax will be applied to your property.

The first year the tax will be payable is 2023, based on the status of the property in 2022. The tax will be calculated at a rate of 1% of the property's assessed value, and the tax will be applied to the Final Tax Bill, which is due on the third Thursday of June (June 15 in 2023).

Definitions 

The following occupancy types may be selected when completing your declaration. If one of the occupancy types below applies to your property, you will not be charged the Vacant Unit Tax.

A two-stage appeal process is available to property owners who wish to have the results of their declaration reviewed.

The first step is filing a Notice of Complaint. If you feel an error was made in determining vacancy, or you did not submit your delcaration, you may appeal the Vacant Unit Tax charge by submitting a Notice of Complaint. 

The deadline to file a Notice of Complaint for properties charged the VUT on the June tax bill is September 15, 2023. If you were charged the VUT as a result of an Audit, the Notice of Complaint deadline is 90 days from the Audit date of determination.

If your Notice of Complaint is accepted (property is determined to be not subject to the Vacant Unit Tax): 

• The Vacant Unit Tax will be cancelled, along with any applicable late penalties 
• If the Vacant Unit Tax has already been paid, you can request a refund 

If you did not pay the balance of the Vacant Unit Tax prior to the due date and your Notice of Complaint is not accepted, the Vacant Unit Tax will be due along with any applicable penalty applied.  

Note: Failure to pay the Vacant Unit Tax before the due date will result in penalty being applied to the tax roll. Notice of Complaint requests may not be finalized by the due date. 

A secondary appeal process is available to property owners who disagree with the results of a Notice of Complaint. Property owners may file a Request for Review once the Notice of Complaint has been completed.

If your property was vacant for at least 184 days in the previous year, you might be able to claim one of the following exemptions.

Audit Process

All property status declarations may be subject to an audit process, in line with best practices for Provincial and Federal tax programs.

If selected for audit, the City will require the owner to provide information and evidence to substantiate their claim of occupancy of a residential property or any exemption.

Audit Steps

1. Upload evidence in your My ServiceOttawa account.  If you are unable to upload evidence through MyServiceOttawa, you can submit evidence:
   • Using this secured link: Vacant Unit Tax - Additional Documentation Form
   • By registered mail to: Revenue Services, Vacant Unit Tax, 100 Constellation Drive 4th Floor East, Ottawa ON K1G 6J8
   • In-person by booking an appointment with Revenue Services located at: Mary Pitt Center 100 Constellation Drive Ottawa ON K2G 6J8  
2. Staff will review the documents you submit and contact you if further evidence, information, or clarification is required. During audit, you will be advised if the documentation submitted is sufficient and appropriate to support the declaration. If the items submitted are determined insufficient or inappropriate, you will be invited to submit further evidence. At the end of the audit process, a letter will be provided advising you of the determination.
3. If you disagree with the audit determination, you will have an opportunity to dispute this by filing a Notice of Complaint within 90 days of the date of determination.

Audit Details

All declarations may be subject to audit for up to two years after the date of declaration.

Properties are selected for audit to determine the validity of the declaration made.

Audits are selected using sampling methodologies in line with best practices for Provincial and Federal tax programs.

Section 4 of Vacant Unit Tax By-law 2022-135 requires all property owners, upon request, to provide evidence to support their declarations.

Failure to submit a property occupancy declaration by the due date will result in a $250 fee added to the tax roll. This fee has been waived for 2023. 

False property status declarations, or failure to provide information when requested may result in fines of up to $10,000, in addition to payment of the tax.

If no declaration is submitted by the late declaration due date, the property will be deemed vacant, and the Vacant Unit Tax will be applied to the roll.  

The Vacant Unit Tax is added to the Final Tax bill, due in June. The Vacant Unit Tax is subject to the same penalties for non-payment as property taxes, including: 

• 1.25% interest added on the 1^st of every month 
• The tax sale process 
• Unpaid Vacant Unit Tax also forms a lien on the property.  

The VUT has some implications for property transactions, and information that vendors and purchasers should be aware of.

The City notes the following information concerning the purchase and sale of properties: 

• If a closing is between January 1 and the closing of the VUT declaration period on April 30, the vendor must complete the VUT property occupancy declaration in accordance with the VUT By-law. As the VUT declaration is for the prior vacancy reference year, only the vendor will know the property's occupancy in the previous year.  
• If a closing is between May 1 and December 31, the buyer must submit a VUT declaration in the following year. They will be able to claim the exemption for properties which are sold in the reference year.  
• As with property taxes, the Vacant Unit Tax will form a lien on the property, and unpaid taxes will become the buyer's responsibility. 

Information for Purchasers 

The City notes the following information concerning the purchase of properties: 

• If a closing is between January 1 and the closing of the declaration period on April 30, the vendor completes the VUT declaration;  
• It is the responsibility of vendors and purchasers to make the appropriate arrangements to ensure that the VUT declaration has been filed. Legal counsel/representatives for purchasers may wish to consider requesting: 
  • a copy of the confirmation email received at the time of declaration;
  • a statutory declaration at closing confirming the filed VUT occupancy declaration is true and correct; 
  • an express representation and warranty confirming that the property has not been vacant (as defined by the Vacant Unit Tax Bylaw) for more than 184 days during the current or prior year; 
  • a holdback where the City has not yet determined if a property is subject to the Vacant Unit tax; 
  • the purchaser's conveyancer carries out an allowance for adjustments, and the Vacancy Unit Tax will be borne solely by the vendor. 
• Purchasers should do their due diligence to ensure they are aware of property tax liabilities.

What is the Vacant Unit Tax? 

The Vacant Unit Tax is a tax on vacant residential units and is imposed under the Vacant Unit Tax (By-law No. 2022-135).  

What is the purpose of the Vacant Unit Tax?

The residential vacant unit tax will encourage homeowners to maintain, occupy or rent their properties, thereby 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 revenue from this tax will be used to support affordable housing initiatives.   

What is the definition of a vacant unit?

A residential unit is considered vacant if it has been unoccupied for an aggregate of more than 184 days during the previous calendar year.  

Which properties are eligible for the VUT?

All properties that are classified as Residential (RT class) that contain six units or less and that have a property code that is eligible as defined in the by-law (Schedule “A”).  

Does the VUT apply to vacant land or lots that have been subdivided but not developed?

No, the Vacant Unit Tax only applies only to land with residential units, and properties which have been assessed by MPAC under on of the eligible properties codes as defined by Schedule 'A' of the Vacant Unit Tax By-law.

Vacant land under development is assessed by MPAC once an occupancy permit has been issued. Supplementary property tax bills are issued once the City is informed of the updated MPAC assessment. Properties will be eligible for the VUT in the year following the issuance of the supplementary tax bills.

How is the VUT calculated and charged?

The VUT is calculated as a percentage of the property’s assessed value.   

The council approved a tax rate of 1% of a property’s assessed value as determined by MPAC. For example, this would result in a $4,150 VUT tax on a residential unit with an assessed value of $415,000. For more information on property assessment, please visit Property tax and assessment information.  

The City of Ottawa’s VUT rate of 1% is aligned with both Toronto and Hamilton who are implementing similar vacancy tax programs. It is considered punitive enough to encourage behavioural change, but not so high as to result in non-compliance.  

Properties which have been determined vacant will be charged the Vacant Unit Tax on their final Property Tax bill due in June.   

How will the revenue from the VUT be used?

All net revenues from the VUT will be reinvested into affordable housing initiatives in the City of Ottawa. Capital funding investments are required to support the construction of up to 500 new affordable and supportive units annually, in accordance with the city’s 10 Year Housing and Homelessness Plan.  

When will I need to submit the declaration?

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.  

How do I complete my declaration?

Property owners can complete their declaration online through Ottawa.ca/VUT using their roll number and access code which was included in the November and January VUT notice. You can also find your roll number and access code at the top of your property tax bill. You may also complete your declaration online using your MyServiceOttawa account through the property tax service.   

The City has declaration options for those who require accessibility-related supports or who cannot access the internet. Beginning in January 2023, residents can call 613-580-2444 to complete their declaration over the phone, or schedule an in-person appointment.  

I own more than one residential property; do I need to submit more than one declaration?

Yes. A declaration must be submitted for each residential property roll number.  

There is more than one owner of my property; do we each need to submit a declaration?

No. Only one declaration is required for each residential property.  

What happens if I make a mistake or forget to declare something when I am submitting my declaration?

If you made a mistake or forgot to declare something, you may resubmit a new declaration up to April 30. After April 30, you will have to submit a Notice of Complaint to request a review of your declaration. 

What happens if I do not submit my declaration by the due date?

Declarations are mandatory. Properties which have not declared will be deemed vacant and be charged the VUT on their final property tax bill.  

I own a duplex/triplex/fourplex/fiveplex/sixplex, do I need to declare for each unit?

Yes. You can submit the status of each unit on your property 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 Hydro or water consumption data to determine which properties are vacant?

Water and hydro use data is protected by privacy laws and cannot be used to determine vacancy. Further, water and hydro usage data would not accurately indicate how the property was occupied. For example, if a property were a principal residence recording low usage due to travel, work contracts, extensive renovations, military postings, or schooling.

I am a snowbird, or out of the country for work for an extended period of time, will I have to pay the tax?

No. If the property is your principal residence, the tax does not apply, however you must complete a property declaration. If a property declaration is not completed, the property will be deemed vacant.   

A principal residence is defined as a residential property where a person ordinarily resides, makes their home, and conducts their daily affairs. It is the property at which they receive their bills, income tax returns, vehicle registration and other similar mailings. A person can only have one principal residence.  

My property contains a “granny suite”, do I need to declare for two units?

No. “Granny” or accessory suites do not require a declaration. The City uses the MPAC property code to determine how many units are contained in a residential property.   

Will my declaration be audited?

All property declarations may be subject to audit. If your declaration is selected for audit, a City of Ottawa staff member will contact you to request supporting documentation. If it is determined that the VUT applies to your property, you will be billed.   

Providing false declarations or false information can result in by-law fines of up to $10,000.  

What can I do if I disagree with the decision of the audit?

If you disagree with the decision of the audit, you have 90 days to submit a Notice of Complaint. 

How can I submit a Notice of complaint?

A Notice of Complaint allows a property owner to dispute the city’s Vacant Unit Tax charge. After April 30, 2023, residents can complete a Notice of Complaint (NOC) by September 15, 2023, where city staff will review the VUT applied to the roll. If the property is declared as a principal residence or occupied, the VUT and any related interest fee would be reversed.  

What can I do if I disagree with the decision on my Notice of Complaint?

If you disagree with the decision made on your Notice of Complaint, you have 90 days to submit a formal Request for Review.

Note, you cannot submit a request for review if you have not received the results of a Notice of Complaint.   

How do I pay the VUT?

If your property is deemed vacant, the VUT amount will be added to your Final Tax Bill, due in June and must be paid before the Final tax bill deadline.  

I am on a monthly Pre-Authorized Debit plan, what will happen if I am charged the VUT?

The VUT amount will be added to the remaining balance on your account, and then be spread out over the remaining payments from July to October. Your property tax payments for the following year will be calculated using only the Municipal tax levy, not including the VUT.  

My mortgage institution pays my property tax bill, what will happen if I am charged the VUT?

Please contact your mortgage institution to determine if they will pay the VUT on your behalf, or you are required to make a separate payment.   

Is the VUT a form of negative option billing?

The VUT is a tax, not a form of negative option billing.   

The Federal Negative Option Billing Regulation applies to financial institutions, not municipalities. The regulations made under the Federal Bank Act and other federal acts apply to financial institutions, not municipalities.   

Negative option billing applies to "consumer transactions," not taxes prescribed under the Municipal Act. The Municipal Act sets out the rules and authorizes a Municipalities' powers for taxation.  

Finally, Part IX.1 of the Municipal Act (Optional Tax on Vacant Residential Units), provides powers to a Municipality to impose a vacant unit tax subject to being designated as a Municipality that can impose the tax. O. Reg. 458/22 designates Ottawa as a Municipality that can impose the vacant unit tax.  

What are the Associated costs related to this VUT program?

In the March 2022 report to FEDCO, Assuming 0.5% of eligible properties are subject to the 1% tax, which would generate an estimated revenue of $33 million collected in the first 5 years. The estimated program costs are $8.2 million for administration of staff, billing, printing, communication, audit and dispute resolution. This results in net revenues of $25 million for the first 5 years.  

What other municipalities use a Vacant Unit Tax to manage vacancy rates? 

Staff conducted a robust benchmarking exercise on this tax across the world.    

• Vancouver’s Empty Homes Tax has been in effect since 2017
• Toronto has approved a vacant residential home tax beginning in 2023
• Hamilton currently has provincial approval to implement a new residential vacant home tax and is currently developing their framework. 
• The Region of Peel have submitted a report to the regional council discussing the feasibility of a vacant unit tax. 
• Staff also reviewed residential vacant unit tax regimes globally to determine best practices in implementing a successful residential vacant unit tax regime, including the cities of Melbourne, Oakland, Los Angeles, Paris and the Republic of Ireland. 

Why must all eligible property owner(s) declare?  

Staff have reviewed several residential vacant unit tax regimes globally to determine how residential vacant unit tax has been implemented. The regimes use one of three different methodologies:  

• Mandatory Declaration
• Voluntary Vacant Unit Declaration: Property owners would voluntarily declare vacancy in good faith and be taxed by the City.
• Complaint-Based: Vacant properties would be identified through a complaint or tip from residents

In all cases, regimes that used the Voluntary Vacant Unit Declaration or Complaint-Based method have been ineffective in capturing vacant units and reducing Vacancies in the Cities. In comparison, those using the mandatory declaration have had much more success. These three options were included in the residential vacant unit tax survey sent out to residents in 2021. The survey responses showed that residents favoured the mandatory declaration annually over the other two approaches.   

For more information, please refer to the “What We Heard” survey results in the VUT report presented to Council on June 9, 2021.  

Why are declaration(s) required annually?

Declarations are required annually to ensure that the VUT is applied accurately and reflects any changes in how the property was used. The City does not have any reliable method to ensure all property occupancy changes are captured.  

What were the key milestone dates in the development of the Vacant Unit Tax program?

These are all the key dates that have occurred in the past couple of years relating to our Vacant Unit Tax program.   

• Council submitted motion to study a vacancy tax on December 9, 2020  
• Public opinion survey (advertised through property tax bill) February 22 – March 31 2021  
• Written submissions from public February 22 – March 31 2021  
• Initial Stakeholder Conversations March 15 – April 15 2021  
• Initial framework report to Council June 9, 2021  
• Ongoing stakeholder discussions October 27 2021 – January 26 2022  
• Vacant Unit Tax Report to council passed March 23, 2022  
• Bylaw passed May 11, 2022  
• Bylaw in effect January 1, 2023

Personal information is collected under the authority of sections 8, 10, and Part IX.1 of the Municipal Act, 2001, S.O. 2001, c. 25 and sections 4 and 5 of City of Ottawa Vacant Unit Tax By-law No. 2022-135.  

Personal information will be used by the City for the purpose of administering the Vacant Unit Tax and enforcement of the by-law.  

Questions about this collection and use of your personal information may be directed to the Program Manager – Revenue Support, 100 Constellation Dr, Ottawa ON K2G 6J8, 613-580-2444, or by email at vut_ilv@ottawa.ca

For questions regarding the vacant unit tax, please email VUT_ILV@ottawa.ca or contact Revenue Services at 613-580-2444.