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Landlords in BC – Vancouver Empty Homes Tax

June 18th, 2017 · No Comments · BC Landlords, Empty Homes Tax, Latest News, Rental Property, Vancouver landlords

Vancouver landlords empty homes tax find good tenantsVancouver Landlords Asks – How Are Other Vancouver Landlords Dealing with the Vancouver Empty Homes Tax?

There was an interesting post on the BC Landlords Forum that is important reading for Vancouver rental property investors. It was from a landlord who had a question about how she can run her rental property in  Vancouver.

Vancouver landlords are facing some big changes in how they run their rental businesses this year.  One of these changes is the Vancouver Empty Homes Tax. 

While there are some groups out there who seem more interested in defending tenants, we know this rule is causing hardship and confusion for many British Columbia landlords. In fact, there are people who believe this is a poor policy and needs to be changed.

However, whether it’s fair or not, the Empty Homes Tax is a reality now and landlords have to be prepared. 

The question from the Vancouver landlord:

Hello fellow BC Landlords!

I own a second property in Vancouver that is not my principle residence.

I rented it out for a year and things were okay. By okay I mean the tenants did pay the rent on time. But there was a lot of wear and tear beyond what I would consider normal and it cost me a lot to clean it up, repair it, and get it ready to even start advertising it to re-rent.

The costs to get it ready costs more than one quarter of the rent that was brought in.

The next tenants I rented to seemed like a nice couple before I handed over the keys. Once they moved in they were filthy and treated the property very poorly. It was constant arguments back and forth as I tried to be reasonable but they only wanted to argue with me.

They always had the idea I was a “rich landlord” who was “taking their money”. They eventually did a midnight run and left the place in really bad shape! My once beautiful property was now looking almost inhabitable.

This “nice couple” left me with..

Scratched floors

I think they must have had pets that weren’t declawed or something.

Disgusting appliances

The oven was filled with grease and their was all this leftover fast food in the fridge. Sinks very clogged with hair or something.

Cat urine smell

They said they didn’t have pets but they must have had a cat because the place reaked of cat urine. 

Left over furniture and trash

They left an old futon, tables and lots of stuff that probably was too much trouble for them to move themselves so they left it all for me to move. Also lots of garbage.

The still owed rent

I’m still owed rent from them which is more than the damage deposit itself.

It was my first experience with “professional tenants” who knew how to play the game and tell really effective lies to me.

Since they left and I cleaned up the property I’ve been wary to rent it out again. I was thinking of just leaving the property empty to avoid repeating this horrible experience.

With properties appreciating I thought I would leave it empty for a year or two and then sell it now that it’s finally in good conditions after again spending thousands of dollars.

So I want to leave the property vacant after dealing with (1) bad tenants and (2) really bad tenants.

Now with this new law coming what can I do?

What is the Vancouver Empty Homes Tax?

It is a new tax on properties that are either not your principal residence or not rented out on a longer term basis.

The purpose of the Empty Homes Tax is, according to the City of Vancouver, to:

Return empty or under-utilized properties to use as long-term rental home for people who live and work in Vancouver

Help relieve pressure on Vancouver’s rental housing market, as our city has one of the lowest vacancy rates and the highest rental costs in Canada

How Does the Vancouver Empty Homes Tax Impact Small Landlords?

According to the City of Vancouver website there are clear rules for residential landlords to follow.

A. Every owner of residential rental property will have to make a property status declaration for the 2017 calendar year and this will determine whether or not the property will be subject to the new Empty Homes Tax. 

B. If you fall under the tax you will pay a tax of 1% of the property’s assessed value.

What Can Vancouver Landlords Do To Succeed in This Empty Home Tax Environment?

Many Vancouver landlords are asking this question.

While Ontario landlords are used to regulations they often feel are unfair and hinder their ability to run profitable rental businesses, BC landlords have had a generally fairer and more business-oriented system.

Here are some keys to success:

1. Rent Out Your Property Long Term

If the property is not your principal residence you will have to rent it out long term. Many small landlords prefer to rent out short term but that is not going to help you in this situation.

2. Choose your Tenants Carefully

Long tenants can create challenges that short-term tenants don’t. 

It’s very important to screen carefully! 

Make sure you run credit checks for BC landlords.

3. Prepare Evidence Is Needed To Prove You Are Renting Out Your Investment Property

Make sure you are ready to prove you are a landlord with long term tenants.  To do this you will need to provide evidence to the City.  This evidence can be submitted in support of a declaration. 

Examples of proof include having a residential tenancy agreement, having income tax returns or notices of assessment stating rental income, bank statements showing recurring rental property income, insurance certificates for tenants insurance, and information from you long-term tenant proving occupancy.

4. Become a Knowledgeable and Professional Landlord

Make sure you become an expert on the regulations government the rental industry in British Columbia.

Vancouver Landlords How Are you Dealing with the Vancouver Empty Homes Tax?

As this is the first example of this type of tax landlords across Canada are watching closely.  It’s more important than ever that landlords prepare for these types of changes in order to succeed as landlords.

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