Real Estate Law Blog

CHANGE

IMPACT on EHT LIABILITY

NEW or AMENDMENT

Tax Rate Reduction

The EHT will reduce from 5% to 3% for the 2023 vacancy reference year.

This addresses in part the concern that a higher EHT will prompt more false declarations and higher audit and compliance costs.

Amendment to the existing 5% rate.

Renovation Exemption

An owner will no longer be required to have their building permit issued by July 1 to qualify for the renovation exemption. Instead an owner may qualify for an exemption provided a building permit is issued anytime within the vacancy reference year.

This addresses compliance issues linked to the challenges in obtaining a building permit by July 1 given the City’s backlog and delays in processing building permits.

Amendment to an existing exemption effective in the 2022 vacancy reference year.

Redevelopment Exemption

An owner will no longer be required to submit a rezoning application or development permit application to the City by July 1 to qualify for the redevelopment exemption. Instead, an owner may qualify for an exemption provided the submission is made anytime within the vacancy reference year.

This addresses compliance issues linked to challenges in submitting a rezoning application or development permit application by July 1 in any year, given the City’s backlog in its process of reviewing such matters before such applications can be formally submitted.

Amendment to an existing exemption effective in the 2022 vacancy reference year.

Rental Restriction Exemption

1. Effective 2024, the current exemption provided to strata properties with rental restrictions will be terminated.
2. Owners that were exempt in 2022 due to rental restrictions imposed on their strata property will qualify for a one-time exemption in 2023.

This addresses compliance issues with existing strata restrictions on rentals which were prohibited by amendments to the Strata Property Act as of November 2, 2022.

Amendment to an existing exemption to comply with the Building and Strata Statutes Amendment Act that prohibits rental restrictions for Strata properties.

Vacant Unsold New Inventory Exemption

Retroactive to 2022, an owner will now be able to claim a yearly exemption for unsold, vacant, new inventory beginning the year after the occupancy permit has been obtained until the inventory is sold or occupied.

This exemption, which is similar to an exemption from SVT, addresses long-standing concerns with EHT on unsold new housing inventory which cannot be rented pending sale without triggering GST.

The report alternatively requests Council to consider the exemption for the year of completion plus one subsequent year. Council voted against this option.

New exemption similar to an existing exemption from SVT.

Uninhabitable Properties Exemption

For properties that cannot be occupied for at least 6 months in the vacancy reference year due to a hazard or disaster, owners will be exempt in the year of the event and the following year.

New exemption similar to an existing exemption from SVT.

Medical Purposes Exemption

Properties used as a secondary residence situated closer to medical treatment will be exempt for every year certified necessary by a medical practitioner.

New exemption similar to an existing exemption from SVT.

Late Declaration Deadline

Owners will have an additional opportunity to declare their property status and reverse the deemed tax levy after the late declaration deadline (currently 1 year and 5 months after the initial deadline) provided their declaration is made within 5 years from the tax reference date and is supported by evidence. This extension will apply retroactively for 5 years.

Amendment to an existing EHT exemption to allow for greater flexibility for those that were eligible for an exemption but failed to apply in a timely manner.

Late Declaration Penalty

If the late declaration deadline is amended, owners who fail to declare property status before the late declaration deadline will be charged an additional penalty of 5% of the tax levy on top of the current $250 penalty for failing to declare status prior to initial declaration deadline.

Amendment to an existing EHT penalty.

Graduated EHT Rate for Chronically Vacant Properties

In addition to the above recommendations, the City report asks Council to consider a graduated EHT rate that increases for properties that are chronically vacant.

Council sent this recommendation back to City staff for further review.