Attention! Underused Housing Tax: Last Day to Fill Out Your Form
Taxes. Can I interest you in some more of them? Well if you are an affected owner (foreign nationals, certain partners in ownership, trustees and corporations), you must fill out the Underused Housing Tax Form by October 31st (today). The Underused Housing Tax is an annual federal 1% tax on the ownership of vacant or underused housing in Canada that took effect on January 1, 2022.
I know what you’re thinking? Why do I have to pay more taxes on a property that I already pay/paid taxes on (LTT, property tax, income tax etc). The short answer: The government is like Oprah when it comes to taxes— "You get a tax! And you get a tax! Everybody gets a tax!!!” All jokes aside (was I joking though?), this tax was introduced to address the housing affordability issue that has been impacting the country. With the rising cost of living, particularly in urban areas, finding affordable housing has become a daunting task for many. In this context, the underused housing tax emerges as a potential solution that not only addresses the problem of housing affordability but also encourages efficient land use.
The underused housing tax is a policy tool designed to incentivize property owners to make efficient use of their properties by imposing a tax on properties that are not adequately utilized. The tax is levied on properties that remain vacant or unused for extended periods, thus encouraging property owners to put their underutilized assets to work. While the specifics of this tax can vary from one jurisdiction to another, the underlying principle is the same: to promote a more efficient and equitable use of land and housing.
Benefits of the Underused Housing Tax
Encourages Efficient Land Use:
One of the primary benefits of the underused housing tax is that it encourages property owners to maximize the utility of their land. This leads to a more efficient use of space in urban areas, reducing urban sprawl and the need to develop new infrastructure. By discouraging the hoarding of properties, this tax can help optimize the use of available land resources.
Addresses Housing Affordability:
By discouraging property owners from keeping housing units vacant, the underused housing tax can increase the supply of available housing. This increased supply, in turn, can help alleviate housing shortages and reduce the overall cost of renting or buying a home. In cities with high demand for housing, this can have a significant impact on affordability.
Generates Revenue for Public Services:
The revenue generated from the underused housing tax can be directed towards funding public services and initiatives related to affordable housing. This can help local governments invest in housing programs, infrastructure, and services that benefit the community as a whole.
Encourages Property Maintenance:
Property owners may be more inclined to maintain and improve their underused properties to avoid or reduce the underused housing tax. This can lead to the revitalization of neglected properties, ultimately improving the overall appearance and quality of neighborhoods.
Reduces Speculation:
In areas where housing is seen as an investment rather than a place to live, the underused housing tax can discourage speculative behavior. By imposing a cost on vacant properties, it can reduce the incentive for property owners to hold onto housing solely for capital gains, promoting a more balanced housing market.
Potential Impact on the Housing Market
The underused housing tax, if well-designed and implemented, could have a positive impact on the housing market by increasing the availability of affordable housing. It can also help create a more equitable system where housing is treated as a resource to be shared rather than a speculative investment.
However, it's essential to consider potential challenges and criticisms associated with this tax, such as defining what constitutes an "underused" property, addressing potential unintended consequences, and the administrative costs of implementation. Careful planning and ongoing evaluation are necessary to ensure that the tax effectively achieves its intended goals without unfairly burdening property owners.
By discouraging the hoarding of properties and encouraging property owners to put vacant units to use, this tax could contribute to more equitable and sustainable urban development. Whether you like it or not, the tax is here and if you’re an affected owner you must file or face the penalties for not filing. So, make sure you get those forms filled out by the end of the day!
