This is the final post in a three-part series that provides important information regarding Vacant Unit Tax for homeowners in the City of Ottawa
This post provides information for homeowners regarding the Vacant Unit Tax (the “VUT”)[1] in the City of Ottawa.
How it works?
VUT has been implemented in the 2023 taxation year and applies to Ottawa’s non-principal residences vacant in the previous calendar year for at least 184 days. The tax applies only to properties in the residential tax class (excludes commercial, industrial, and multi-residential properties).
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.
All residential property owners in the City of Ottawa will be required to register the status of their property during the previous year. 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; and
- Properties qualifying for one of the available exemptions (for more information regarding exemptions please visit the City of Ottawa’s website[2]).
How to Declare
Declarations can be made from January to the Interim Tax due date (the third Thursday in March). If an owner owns more than one property, they must submit a declaration for each.
To make your declaration[3], you will need:
- Property tax roll number and access code. Alternatively, you can log in through your MyServiceOttawa account;
- Full name and contact details (phone number and email) of the person making the declaration; and
- Details on the occupancy of your unit(s).
- Additional information to support an exemption, if applicable
Examples of additional information include but are not limited to:
- Start and end dates of occupancy;
- Date of death;
- Court or government order numbers; and
- Construction permit numbers and brief descriptions of the project(s).
Deadline
This year the deadline for Ottawa residents to submit their declaration is March 21, 2024.
Late Declarations, Fees, Fines & Penalties
If no declaration is made by homeowners in the City of Ottawa, the property will be deemed vacant and will be subject to the tax.
If homeowners fail to declare their property or miss the deadline, they will be subject to a declaration fee of $250.
Additionally, penalties and interest will be imposed for non-compliance.
A penalty of 1.25 percent will be charged on the first day of default, followed by an interest rate of 1.25 percent monthly.
Appeal Process
A two-stage process is available to property owners in the City of Ottawa who wish to have the outcome of their declaration reviewed. Homeowners can submit their Notice of Complaint online through the City of Ottawa’s portal.
The deadline to file a Notice of Complaint for properties charged the VUT on the June tax bill is September 15.[4]
If the person was charged the VUT as a result of an Audit, the Notice of Complaint deadline is 90 days from the Audit date of determination.
The Vacant Home Tax regime has implications for property transactions for both purchasers and vendors. It is the responsibility of purchasers and vendors to make appropriate arrangements to ensure that the declaration of occupancy status has been submitted. Purchasers and their solicitors should ensure that there are provisions in the purchase agreements that require the Vendor to:
- Provide a copy of the signed occupancy status declaration; and
- Provide a statutory declaration that the occupancy status declaration was field with the correct office of the city, that the information was accurate and correct, and that any required Vacant Home Tax has been paid.
Purchasers and their solicitors should perform their own due diligence regarding the filing of the occupancy status declaration and payment of any resulting tax.
Purchases’ solicitors should obtain a tax certificate from the city, setting forth an itemized statement of all amounts owing in respect of the property as of the date that the statement is issued.
For more information, please contact Pooneh Sooresrafil at sooresrafil@gsnh.com.
These comments are of a general nature and not intended to provide legal advice as individual situations will differ and should be discussed with a lawyer.
[1] https://ottawa.ca/en/living-ottawa/taxes/property-taxes/vacant-unit-tax / https://www.hamilton.ca/home-neighbourhood/property-taxes/vacant-unit-tax
[2] https://ottawa.ca/en/living-ottawa/taxes/property-taxes/vacant-unit-tax/understanding-vacant-unit-tax#section-db90c207-30c3-4d7a-9f1e-a6209badc0f9
[3] https://ottawa.ca/en/living-ottawa/taxes/property-taxes/vacant-unit-tax/declare-property-status
[4] https://ottawa.ca/en/living-ottawa/taxes/property-taxes/vacant-unit-tax/appeals#section-2e170215-6c02-4156-b2fa-05e19d048159