Vancouver's empty home tax is increasing to 3% next year | Hacker News Reader

Vancouver's empty home tax is increasing to 3% next year

bc.ctvnews.ca

100 pointssynack42 comments

India has a "deemed rent" model where an empty house is assumed to be rented out at an average for the area. This deemed income is then included in calculating income tax (rather than property tax). Compliance is poor but the model can potentially be made to work.

Some cities also have a penalty on unmaintained properties but compliance is even poorer!

Is it all over India?

No.

If someone has two (or more) houses that are declared as self-occupied (maybe empty or in use, but not let out) then that person can treat one as where the person stays and the other(s) is treated as rented. This applies across India as this is part of the income tax rules.

Anyone who has ever seen a deindustrialized American city like Detroit knows that there are rotting mansions, while working people live in cramped tenements.

Imagine if Detroit had imposed a $5000/year non-occupancy tax on those foreclosed or abandoned mansions. People would have lived in them and maintained them, instead of letting them rot.

Aren’t they rotting because the owner defaulted and wouldn’t be able to pay further punishments anyway? If you’re 500k in the hole, how is a 5k tax going to do anything?

The bank would be forced to sell it or keep paying the 5000 tax at that point. Which would circulate housing faster through banks. It might even make banks be willing to work for better payment plans for the people owing debt.

No, they rotted because no one wanted to live there.

Whereas, everyone, their dog and dead grandmother wants to live in YVR.

It's so weird that people find it hard to see a rotted mansion as a policy failure. That's straight up economic waste. It's like dumping milk to support the market price, even if people are hungry.

Detroit isn't abandoned. It just doesn't have rich people, and banks were too aggressive in their pricing of foreclosed properties. Now those properties have all rotted.

Economic waste should be severely penalized in the tax code.

Detroit needed to shed its obligations before even a free house or land made sense for many people.

The government’s obligations were made with the assumption that population (and economic) growth would continue. It did the opposite, and you simply can’t operate a business (or government) where more than half of your revenue is gone and your expenses keep rising.

Just like you wouldn’t invest in a business laden with outsized debt obligations from projections that didn’t come true, you wouldn’t want to put your name on a title to take on the obligations of a city who had lost 50%+ of its people and revenue.

Supposedly, this was attempted to be fixed in 2014’s bankruptcy rulings, so we’ll have to see if that brought the expenses in line to make it a worthwhile investment.

The house is a real physical thing. Obligations, debt, bankruptcies, these are all abstractions. Ideally the abstractions should lead to the real physical things being taken care of. If they don't, something may be wrong with the abstractions. But we should be clear that there will always be some waste, so the question is if waste is higher than it needs to be.

Yes, but that didn’t happen until 2014, while the economic realities were clear to investors (including people deciding where to live and raise families) for decades already.

Unfortunately, the political machine can move slower than society needs it to and in the meantime, the infrastructure and real physical things degrade.

YVR=Vancouver I had to look it up.

Luckily that’s not Vancouver’s problem.

An old Detroit mansion is not an easy thing to maintain. Even if they aren’t full of ancient fixtures, wiring, plumbing, heating, and have a solid roof just maintaining a property like that in working order is no small and inexpensive task. These properties are rotting because people with the wherewithal to actually afford them don’t want the hassle.

That's a great point, but the maintenance techniques aren't terribly difficult to learn. One could easily imagine those skills spreading quickly in an environment where abandoned buildings are cheap to occupy. That presumes that buildings can be acquired before they have rotted into uselessness.

A lot of those maintenance needs, especially for older buildings are going to require licensed electrician or plumbers. No insurance company or lender is going to want to touch old properties with outdated electrical and plumbing with extensive do it yourself work, and for good reason.

Well if you diy plumb it, worst possible outcome is that they rot isn't it? And that's already happening.

The worst case is that you spread disease back into the municipal water supply and kill neighbours.

Those buildings were abandoned. I don't know how increasing their liability would solve the problem.

Despite what people who have only lived in booming metros may think, housing can not only decline in value, it can go negative, which is to say that it can decline to the point that maintenance costs exceed the improved value.

These houses were abandoned because they are literally worthless. Worse, they're liabilities.

Then Detroit wouldn’t be in America. Private property rights are core to a capitalist society and American constitution.

To attempt to alter that is to alter the foundations upon which this nation was founded.

Public policy should be based long term vision and not as a short term band aid to specific handicaps.

My family is originally from Detroit. The posts in this thread don't reflect reality.

A good duplex for sale in Detroit is around $20,000 now.

If it's recently empty, it's $5,000 plus back taxes.

If it's been empty for more than a couple weeks, it has already been stripped and burned once or twice and the lot has little value, plus back taxes.

The policy of the Detroit Fire Department to avoid injuries is to allow houses to burn to the ground, then bulldoze them.

The problem with living in most of Detroit is that as soon aa you leave the house to go to work or shopping, your neighbors will see you leave and attempt to break into your house. Fences, razor wire and padlocks help, but in the end it's a losing battle.

Toledo, Ohio is in worse shape than Detroit. When I was there 40 years ago, it was literally a moonscape - just house foundations visible for miles. Not sure if they rebuilt it or not.

>> as soon aa you leave the house to go to work or shopping, your neighbors will see you leave and attempt to break into your house

Really? In 21st century? seems like the Wild West to me.

This is an interesting idea... an empty home tax...

What if, for real estate markets saturated with huge numbers of empty homes, a home tax was applied, and the proceeds of this home tax were then directly used to fund cheap/free (depending on if they had an income or not) housing for the homeless?

Why? What you are suggesting is straight up theft. Anyone should be able to buy as many properties as they want and keep it empty or live in them?

What the govt needs to do is build shelters and add beds. That’s the extent of public charity. Not handing out homes by penalizing those who managed to create value.

The only penalisation for empty homes should be upon foreigners buying homes and keeping it empty. Property taxes for foreign owned real estate ought to be higher as it exists at the cost of excluding local population from housing. It should be punitively high so foreign investment isn’t playing speculative games on real estate.

That's not theft, just policy. The state is exactly what enforces the concept of property (private, public, or otherwise), if there's popular support for the state to incentivize private property owners to act in the interest of the population, then it's just another policy. It can work or not, but certainly no citizen is entitled to real estate speculation being hassle-free.

Ok.

How do they verify that it's empty? Is there some national registry of people's declared residence, and if that property is not occupied by someone's primary residence, it gets taxed at this penalty rate?

They rely on property owners (and probably usually property management companies) to self-declare: https://vancouver.ca/home-property-development/declare-prope...

It's...really not that hard to tell if a residence is being used or not.

It doesn't even need to be a national registry if people. You know who owns what house and who is married to who. You also know who is living where.

With the data states have in the US I can get a pretty confident list of empty houses.

Could also obtain water usage data from the city water dept. Fairly reliable indicator of occupancy, although you’d need to ensure someone wasn’t running the taps needlessly to avoid the tax.

Fairly easily gamed though with some sort of IoT taps.

In the U.S. the IRS determines your "primary address" based on where you physically spend the most time [0]. I'm sure Canada has similar rules for tax purposes and cities could get this info from local and national tax returns.

[0] More or less: https://www.rocketmortgage.com/learn/primary-residence

IMO, it makes more sense just to have a high property tax rate and return funds to residents (either directly, or through well-funded city services). It achieves basically the same thing in the end, but with less fiddling over details like verifying emptiness.

Manhattan needs this.

All taxes are regressive against the poor, but property taxes are a special kind of evil that specifically targets them and tries to prevent them from rising up in the world.

Oh hey you saved up for something nice? Here's a fine for that.

I don't think the poor and down-trodden are buying up homes in Vancouver. The issue is rich foreign investors buying up real estate either as vacation homes or investment properties. The only way these people contribute to the economy and community of Vancouver is through taxes. Raising the taxes should theoretically make this type of investment less desirable (and thus more affordable for poorer local residents)

The worst part of all is the endless money printing by central banks. Wages don’t keep up, and the vast majority of the new money goes straight to those who need it least. Meanwhile savings accounts pay nothing worth talking about. It’s a world for debtors that punishes savers, and actually saving up for meaningful assets becomes ever harder for our long suffering working class.

This isn't really a problem in this case.

Housing in Vancouver is _incredibly_ expensive, and there's a huge amount of foreign ownership by rich people that leave the dwelling empty all the time, or maybe only live in it for a few weeks or months per year.

If someone is wealthy enough to own a property in Vancouver and not use it more than half the year, I don't have an ounce of sympathy for them being taxed for that. If they don't like it, sell the property, and rent an absolutely beautiful AIrbnb or house for the times that they are in the city.

I can't really imagine the poor buying property just to leave it empty. That sounds more like the behaviour of rich real estate investors.

It's mostly because of foreign investors (ie: Chinese multi-millionaires) using real-estate using empty houses as a way to store their money abroad, making the market even more unaffordable for everyone else by increasing price and creating a shortage.

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