The City of Ottawa has passed a By-law dealing with the “Vacant Unit Tax”. It comes into force 1 January 2023 and imposes a tax of 1% of the assessed value of residential units which were vacant for more than 184 days in 2022. So, actually that means “185” days!
This is similar but slightly different from the City of Toronto Vacant HomeTax.
Have a look at some of the cautions which the City of Ottawa directs to purchasers:
The City notes the following information concerning the purchase of properties:
- If a closing is between January 1 and the closing of the declaration period on April 30, the vendor completes the VUT declaration;
- It is the responsibility of vendors and purchasers to make the appropriate arrangements to ensure that the VUT declaration has been filed. Legal counsel/representatives for purchasers may wish to consider requesting:
- a copy of the filed VUT declaration prior to closing;
- a statutory declaration at closing confirming the filed VUT occupancy declaration is true and correct;
- an express representation and warranty confirming that the property has not been vacant (as defined by the Vacant Unit Tax Bylaw) for more than 184 days during the current or prior year;
- a holdback where the City has not yet determined if a property is subject to the Vacant Unit tax;
- the purchaser’s conveyancer carries out an allowance for adjustments, and the Vacancy Unit Tax will be borne solely by the vendor.
- Purchasers should do their due diligence to ensure they are aware of property tax liabilities.
The due diligence undertaken here will be similar to the steps a Toronto Purchaser should take to protect themselves.
Brian Madigan LL.B., Broker