Vacant Unit Tax

By Noah Potechin (Of Counsel) of Merovitz Potechin LLP on Monday August 15, 2022.

On May 11, 2022, The City of Ottawa (the “City”) instituted a new By-Law related to vacant residential properties. The By-Law includes three key components that every residential homeowner should be aware of:

1. The City has made the determination that, moving forward, a homeowner should not be permitted to have a vacant property;
2. Having a vacant property will be a taxable offence – The Vacant Unit Tax; and
3. A property owner is assumed to be holding a vacant property unless the owner declares to the City that the property is occupied.

Declaration of Vacancy

As a result of this new By-Law, the onus has been moved to each individual and corporate owner of a residential property to declare that a property is or is not vacant. Failure to make a declaration will result in the Vacant Unit Tax (the “VUT”) becoming chargeable.  

The By-Law requirement commences on January 1, 2023, and a declaration will be an annual requirement thereafter. Eligible property owners will receive notification each year to remind them to declare.

Vacant Unit Tax

If charged, the Vacant Unit Tax will equal 1% of the taxable assessed value of the property. As a City tax, once charged, the VUT may then become the subject of a City lien registered over the property.

Residential homeowners should review the City’s Vacant Unit Tax webpage carefully. There are important sections for buyers and sellers, as well as owners of multi-unit buildings (which is limited to six units). The webpage also provides answers to some frequently asked questions.

Residential Purchases and Sales

This By-Law will also affect residential property purchases and sales because the previous occupancy status of a property recently purchased may not be known to the purchaser. If a closing is between January 1 and April 30, the Seller will be responsible to make a declaration with respect to occupancy to the City for the past year. If the closing takes place after April 30, the Buyer will then be permitted to make a declaration to the City in the following year between January and April.

Exemptions

Some exemptions apply to the VUT including, but not limited to, death, hospitalization, cottage properties and renovations. A full list of exceptions is available on the City’s Vacant Unit Tax webpage.

If after reviewing the City’s webpage you still have questions about the Vacant Unit Tax, please contact our Real Estate Lawyers at Merovitz Potechin LLP.