Vacant unit tax

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Overview

On May 11, 2022, City Council approved the Vacant Unit Tax (VUT). The VUT is intended to encourage homeowners to maintain, occupy or rent their properties to increase the housing supply. Revenue from this tax will be used to support affordable housing initiatives.  

The tax does not apply to:

  • Principal Residence  
  • Tenanted properties  
  • Occupied by a family member, friend, or other resident using it as their principal residence 

Note: Declarations are not required until 2023. 

Do you own a residential property in Ottawa?

Staring January 2023, residential property owners must declare the occupancy status of their property during the previous year.

The online declaration takes less than 5 minutes to complete.

Your declaration will ensure the City has the most reliable, complete and accurate data for the Vacant Unit Tax.

This new tax may apply if a residential property stays vacant for over 184 days in a year.

The Vacant Unit Tax helps increase Ottawa’s housing supply and supports affordable housing.

Program framework

The Residential Vacant Unit Tax report was approved on March 23, 2022. The by-law was approved on May 11, 2022. The VUT will be implemented in the 2023 taxation year and apply to non-principal residences vacant in 2022 for at least 184 days. 

Definition of a vacant unit

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 a 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). 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, please refer to your most recent Final Tax Bill. The property code can be found on the back of the bill.

Tax amount

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. 

Declaration

Annually, every homeowner in Ottawa will be required to declare to the City if their home is occupied or vacant to determine if the tax is payable. If one of the situations below applies to your property, the Vacant Unit Tax will not apply.  

Status Description
Principal residence – homeowner   The property is where you reside and conduct your daily affairs, receive mail, pay bills etc. You can only have one principal residence. This applies even if you leave for extended periods of time due to travel or work.  
Principal Residence – Permitted occupant   The property is occupied by a family member, friend, or other permitted occupant for residential use, and they claim it as their principal residence.  
Tenanted Property   Your property was occupied by tenants for at least 184 days in increments of at least 30 days.  

If the property was vacant for more than 184 days, and one of the exemptions outlined below can be applied, you will be able to select the appropriate exemption. 

The determination period comes into effect starting in 2022, with the declaration required in early 2023. If a property is declared or deemed to be vacant, the tax will be applied to their Final Tax bill in 2023. Eligible property owners will receive reminders to declare each year. 

Declarations will be submitted online. Alternative methods will be available for accessibility.

Exemptions and audits

Exemptions

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.   

In Case of Sale   You purchased your property in the previous year, and the sale involved a 100% transfer of an interest in the property to an unrelated individual or corporation. This excludes name changes, adding a second owner, removing a second owner etc.  
In Case of Court/Government Order   A court or government order prohibits the property from being occupied. Note: in cases where occupancy is not permitted due to the owner's neglect, an exemption will not be granted.  
In Case of Death   The property was vacant for at least 184 days in the previous year due to the death of an owner. This exemption is only available in the year of death and the subsequent year. 
Owner in Care   The owner or occupant was residing in a hospital, long-term or supportive care facility for at least 184 days in the previous calendar year.  
Construction/Renovation   The property was undergoing redevelopment or major renovations for which the appropriate building permits have been issued. The project must be significant enough that the property cannot be occupied for at least 184 days in the year. Minor renovations are not included.   
Combination of tenanted and construction/renovation   The property had a combination of tenants and vacancies for construction/renovation totalling at least 184 days   
Cottage rental   The property is used as a cottage rental in the rural area, with a valid host permit, and it is rented for at least 100 days in the previous year 

Audits

Audits of properties and declarations will be completed annually. Properties and declarations will be selected based on varied criteria. If a property or declaration is selected for audit, staff will work with property owners to ensure declarations are accurate. If a declaration is deemed false, the tax will apply. 

Documentation Required Upon Request

Additional information may be required at the time of declaration or may be requested during an audit. Examples of documentation are listed below and are not limited to the items listed.

Status or Exemption Information Collected at Time of Declaration Documentation Required Upon Request
Principal Residence – homeowner N/A Driver's license OR Ontario ID card Vehicle insurance and registration Insurance document Utility bill
Principal Residence – Permitted occupant Name and contact information Driver's license OR Ontario ID card Vehicle insurance and registration Insurance document Utility bill
Tenanted Property Full name of tenant(s) and contact information Tenancy agreement Proof of income
In Case of Sale Date of closing Agreement for purchase and sale Title Transfer from Land Registry Office
In Case of Court/ Government Order Court order number/reference number Copy of court order
In Case of Death Date of death Death certificate
Owner in Care Name of person in care Name of facility and contact information Letterhead from facility
Construction/ Renovation Permit/application number Short description of project Building permits
Short Term Rentals Short term rental permit number Proof property occupied for at least 100 nights Proof of income

Will the Vacant Unit Tax apply to me?

Most properties will not be subject to the Vacant Unit Tax, including:

  • Properties used as a principal residence by the owner, a family member or friend, or other permitted occupant for at least six months of the year
  • Occupied by tenants for at least six months in increments of 30 or more days
  • Meets the criteria for one of the exemptions

The questionnaire is for informational purposes only. It is not a determination on whether or not your property will be subject to the Vacant Unit Tax. If there are any discrepancies between the information provided here and the provisions of the Vacant Unit Tax by-law, the latter will prevail. 

Will the Vacant Unit Tax Apply to Me? 

Timeline

Vacancy determination period begins for 2022 calendar year January 1 2022
Resident awareness campaign begins Summer 2022
Vacancy determination period ends for 2022 calendar year December 31 2022
Declaration process opens for 2022 reference period January 1 2023
Declaration due date for 2022 reference period  March 16 2023 
Late declaration due date   April 30 2023 
Vacant unit tax applied to Final Tax bills June 2023
Audit and appeals period opens July 2023

Real Estate Transactions and the VUT

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 declaration period on April 30, the vendor must complete the property occupancy declaration in accordance with the VUT By-law. As the 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 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 declaration;  
  • It is the responsibility of vendors and purchasers to make the appropriate arrangements to ensure that the declaration has been filed. Legal counsel/representatives for purchasers may wish to consider requesting: 
    • a copy of the filed declaration prior to closing;
    • a statutory declaration at closing confirming the filed occupancy declaration is true and correct; 
    • an express representation and warranty confirming that the property has not been vacant (as defined by the Vacancy 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 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. 

Information for Vendors 

The City notes the following information for consideration concerning the sale of properties: 

  • If a closing is between January 1 and the closing of the declaration period on April 30, Vendors should complete the property occupancy declaration;  
  • Vendors should provide a copy of the completed and filed property occupancy declaration to the purchaser; 
  • Vendors should provide a statutory declaration at closing confirming the filed property status declaration is true and correct.

FAQ's

What is the Vacant Unit Tax?  

The Vacant Unit Tax is a tax on vacant residential units. A by-law will be approved by City Council later this spring. 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.   

How is the VUT calculated?  

The VUT is calculated as a percentage of the property's assessed value. The current VUT rate is 1%.   

Who will be affected by the VUT?  

Residential properties not being used as principal residences that have been unoccupied for at least 184 days in the reference period will be subject to the tax.  

Which properties are eligible for the VUT?  

Properties assessed in the residential tax class and have a property code that will be defined in the by-law are eligible for the VUT.   

How will the revenue from the VUT be used?  

Net revenues from the VUT will be reinvested into affordable housing initiatives in the City of Ottawa.  

What is the definition of a vacant unit?  

A residential unit is considered vacant if it has been unoccupied for at least 184 days during the previous calendar year.

I am a snowbird, and my home is vacant for several months each year. Will I have to pay the tax?  

No. If the property is your principal residence, the tax does not apply, but a declaration is still required. In addition, you may have to provide evidence, such as a driver's license, if selected for audit. 

When will I need to submit the declaration?  

Declarations must be submitted by the Interim Tax due date each year.  

Will I get reminders to declare? 

Yes. Eligible property owners will receive notification each year to remind them to declare. 

How can I get electronic reminders to declare?  

To get electronic reminders to declare, you can select paperless billing on MySO. If you do not have a My ServiceOttawa account, you will first need to register for one. Then, register your property tax account to your My ServiceOttawa account, following these instructions. Select paperless billing during registration.  

How can I submit a declaration?  

Declarations can be submitted online through Ottawa.ca. Alternative methods will also be provided for accessibility. 

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

Yes. A declaration must be submitted for each property.  

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 property.  

What is a "permitted occupant"? 

A permitted occupant can be a family member, friend or other person living at the property who is using it as their principal residence, without a lease agreement. 

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 property code assigned to your property by MPAC determines the number of units that are required to declare. The eligible property codes will be listed in the by-law. 

Where can I find my property code? 

You can find your property code on the back of your latest final tax bill or by visiting www.aboutmyproperty.ca and reviewing your property information 

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

Yes. You should submit the status of each unit on your property on the same declaration form.   

I own a cottage that I do not rent out; do I have to pay the VUT? 

If the property code assigned to your cottage by MPAC identifies it as a seasonal property, you do not have to submit a declaration for the VUT. The list of eligible properties required to declare will be included with the by-law.   

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

Declarations are mandatory. If you do not submit a declaration by the due date, a late fee will be issued, and you must pay the fee and submit a late declaration. If no declaration is received, your property will be deemed vacant, and the VUT will be applied to your final tax bill.   

When can I submit a late declaration?  

Late declarations will be open until April 30. Submit your declaration on Ottawa.ca.  

Will my declaration be audited?  

The City will audit declarations each year based on a variety of factors. Your property may be subject to audit. 

What happens if my declaration is selected for audit?  

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

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. A notice of complaint can be submitted online by visiting www.ottawa.ca/vut.  

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 60 days to submit a formal request for an appeal. Note that you cannot submit a request for an appeal if you have not received a Notice of Complaint result.   

What happens if I do not submit a declaration?  

If your property is eligible for the VUT and you do not submit a declaration, your property will be deemed vacant, and the VUT will be applied to your tax roll.   

How do I pay the VUT?  

If you declare your property as vacant, or it is deemed vacant by the City, the VUT amount will be added to your Final Tax Bill, due in June. 

If you are a client paying by Pre-Authorized Debit monthly, the amount of the VUT will be divided between the final four payments from July to October.

If you are a client paying by Pre-Authorized Debit on the due date, the total amount owing will be withdrawn from your account on the due date.

If your mortgage company is paying the taxes on your behalf, please contact them to discuss your options.

What do I do if I cannot find my roll number or access code? 

If you cannot locate your roll number and access code, please contact Customer Accounts at 613-580-2444 or revenue@ottawa.ca

Contact us

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