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Should the government have the right to tell you that someone should occupy your home or you will be penalized for not complying?

Supporters of Bill 46, the so-called vacant homes tax bill, think it does, and moreover, think a penalty tax should be used to coerce owners into either renting their home or selling it.

There are about 285,000 parcels categorized as residential, and about 155,000 of those have homeowner exemptions. Those with homeowner exemptions are excluded from the vacant homes tax. That leaves about 130,000 parcels, of which 30,000 are assessed at over $1 million and fall under Residential A. 

The remaining approximate 100,000 residential parcels will need to be analyzed for potential inclusion if Bill 46 passes, according to the director of Budget and Fiscal Services. A few of these parcels are parking stalls. Some are empty lots. We do not yet know how many of these properties will be affected, nor how many are actually vacant under the bill’s definition. What we do know, however, is that there are some unfair provisions in the bill, it will be costly to administer and enforce, and there will very likely be negative unintended consequences.

The tax itself is unfair and unreasonable. The 3% tax rate that is likely to be charged is about 856% (almost 10 times) more than the residential tax rate.

One of the unfair provisions is that the sale of a home the second time in a five-year period does not qualify for the “for sale” exception. This is grossly unfair.

BFS will be tasked with educating owners, collecting and reviewing evidence and assessing and then enforcing this new tax, among other duties. BFS will also need to establish rules by Dec. 31, 2025, to implement the tax. The director has stated a new division within BFS will be required just to handle this tax.

Most of the evidence for exceptions in the bill will be specified during the rules-making process, but we have an idea of what will be included based on prior versions. Some of the documents include lease agreements, general excise and income tax returns and related proof of payment, vehicle registration, utility records, personal bank and credit card statements, driver’s licenses, death certificates, court orders, building permits, proof of military deployment, proof of medical care, etc. 

Most of these documents do not show how long someone has occupied a property; it’s therefore likely that multiple documents will be required. This not only raises questions about privacy as it is highly invasive, but can lead to a check-the-box attitude of staff who are trying to work through hundreds of thousands of documents in a short period of time. And keep in mind this is an annual process.

This tax is likely to drive up rents, as property management companies will also need to handle additional paperwork on their end. For owners who manage the rental property themselves, no doubt there will be some who miss the deadline, are assessed the tax and then pass it along to tenants.

I understand the intent of an empty homes tax, but this is not the right vehicle to effect significant changes in our housing inventory, especially affordable housing. The government should not be able to tell you that you must have occupants in your home in order to avoid a punitive tax.