Vancouver man gets surprise $17K bill for empty homes tax on live-work townhouse

The owner of a Vancouver property zoned for both business and residential use was shocked to receive an empty homes tax bill of almost $17,000 — even though it's occupied for most of the year.

Shawn Moore's modern three-storey townhouse at the corner of Pacific and Howe streets is one of four in a row that are zoned for use as offices, private residences or a combination of both.

When the time came to make his declaration for the city's empty homes tax earlier this year, Shawn Moore said his property was occupied, since his marketing agency was using it as an office for most of the year and, in November, another tenant moved in.

When Moore learned he was being audited, he said it didn't bother him, because he was confident he wouldn't have to pay the new tax.

But the shock came soon after when he got the bill.

"I mean, we certainly never budgeted for that," said Moore, adding that it could damage his business. "That's like an extra $1,200-$1,300 a month in expenses."

Moore bought the townhouse several years ago, and has built up his business over that time, ultimately outgrowing the space late last year.

Initially he lived there too, but Moore bought another home downtown, which he declared as his primary residence this year. He said he stayed overnight at the Pacific Street property dozens of times in 2018, but its main purpose was to serve as an office.

"We had full-time staff in the property every day — it's zoned for that," he said. "It also gave me the opportunity — on the third floor — to live, which I did over the course of the past eight years."

Moore said as he tried to fight the tax bill and navigate the audit, city staff were very helpful. But he said the process still took about 30 hours of his time, including calls to lawyers and tax accountants, and in the end, it was the auditors who lacked flexibility.

"The auditors acknowledged that it is zoned for live-work-commercial. But they don't care. It's a vacancy tax that applies to all zonings that have any residential component to them," he said.

'Decision is made by B.C. Assessment'

According to a written statement from Melanie Kerr, director of financial services at the City of Vancouver, the question of how live-work properties are taxed rests with B.C. Assessment — even though the empty homes tax is a municipal tax.

"This classification decision is made by B.C. Assessment, not by the city," said Kerr. "Live-work units may be classed by B.C. Assessment as residential or business, depending on their use."

"If they are classed as residential, then they must file a declaration as per the city's empty homes tax, and if they are not occupied for residential purposes or rented, then they would be required to pay the tax," she said.

Moore said the tax may force him to rent his property only to tenants who plan to use it as a home, despite the opportunity provided by the uncommon zoning.

"Otherwise I'm going to be forced to pay an extra $16,000-$17,000 a year," he said. "We weren't prepared for that, so I'd have to rethink things."

But Moore is still hoping the city comes to appreciate his position, and make an empty homes tax exemption for property owners like him.

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