Some Ottawa property owners could pay $250 or more if they don't check a box

Most residential property owners will have to remember to tell the City of Ottawa every year their homes are not vacant, or risk paying either a $250 late fee or thousands of dollars in tax.

The city's finance and economic development committee approved a new vacant-unit tax on Tuesday aimed at ensuring livable housing doesn't sit empty.

Staff members in the city's finance department estimate the new tax, which will be one per cent of a property's assessed value, will apply to somewhere in the range of 1,653 properties in Ottawa when it first shows up on municipal tax bills in May 2023.

• Ottawa set to charge tax on vacant homes

A vacant unit will be defined as one that is not an owner's or renter's principal residence, and is unoccupied for more than 184 days during the previous calendar year. The tax will apply to buildings with up to six units. There are some exemptions, such as if a property is being sold or renovated, or if the owner is in care.

To truly know how many residential properties are vacant, the City of Ottawa will make it mandatory for all 330,000 property owners to submit a declaration every year.

Deemed vacant after April 30

Ottawa had considered a voluntary or complaint-based system, but research showed that method would be ineffective, staff said. Instead, the mandatory approach will match what's currently happening in Vancouver and planned for Toronto.

Each year, every property owner will have from the beginning of January to the third week of March to declare whether a unit is vacant, mainly through the city's website. If the deadline is not met, the owner will be fined $250. If the declaration remains empty at the end of April, their property will be deemed vacant and they will face the one per cent tax, which represents more than $4,000 for the average assessed home.

The vacancy declarations will begin in January 2023, but the late fee won't apply in the first year "because this is such a big change for our city," said chief financial officer Wendy Stephanson.

The Federation of Citizens' Associations of Ottawa called the goal of the tax "laudable," but told committee the city shouldn't put the onus on thousands of consumers to exempt themselves from a $250 late fee or the tax itself.

"Councillors should realize that they will receive complaints from homeowners in these situations," said group president Alex Cullen.

Cullen, a former city councillor, pointed out not all homeowners use the internet — the main format for making the declaration — while some people pay their taxes through a financial institution and might not get the notice. 

Mayor Jim Watson suggested the declaration be highlighted in a different colour on property tax bills. Staff said four notices would be sent out in the coming months to all 330,000 owners, and promised those who aren't computer savvy will receive other options. There will also be an appeal process.

"We are asking residents to take an extra step now," said Stittsville Coun. Glen Gower. "But given the housing crisis that we're in, given the objectives of reducing the number of vacant units and the benefit we would get from these taxes going to affordable housing, I think it's a very small thing to ask of property owners to do on a yearly basis." 

The program is expected to bring in $5 million a year for affordable housing. That accounts for the cost of running the program with eight permanent and five temporary full-time positions in the first couple of years.

The report on the new vacant unit tax will go to full city council on March 9. Once the province designates Ottawa an eligible municipality to levy the tax, the city's bylaw can be adopted.