5 Tips To Avoid Empty Home Tax
A registered residential property owner in Canada is required to declare property status every year. When you fail to complete the declaration by the due date, the government makes your property vacant, and you’ll be charged an additional vacancy tax based on the property value. The additional percentage may vary from one province to another.
Vancouver was the first city to impose an empty home tax starting in 2016. Initially, the tax percentage was one percent, but now it has increased to 3%. From January 2022, the Canadian federal government introduced a national underused housing tax. In 2020 the speculation and vacancy tax in British Columbia collected almost $81 million. Toronto and Ottawa also introduced empty house taxes in the year 2022.
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What is considered an empty house?
Properties are considered to be empty or vacant if they remain unoccupied for more than six months during a particular tax year (from Jan to Dec).
Additionally, if you fail to declare a property status every year within a particular deadline, your property will be considered vacant by the government, and you will be liable to pay the empty home tax. For late declaration penalty, charges are applicable.
Defining the term “Parcel” in real estate
While dealing with housing tax documentation, you might come across the term “parcel.” A parcel can be defined as a taxable piece of property and is usually identified by a unique, designated folio number. You need to mention this number while declaring the property’s status, filing for property taxes or any other legal transactions related to your property.
How vacant home taxes are calculated?
The annual empty home tax calculation is based on your property’s evaluated taxable value in the market in the previous tax year. In 2021 the empty home tax state in Vancouver was 3%.
How to avoid empty home tax?
An empty home tax can be avoided if you present concrete documentation of the following situations:
- Ongoing major renovations.
- Registered owner undergoing medical treatment.
- Ongoing selling process
- Home occupancy or rental utilization is detained by court order.
While the last factor might not be good news for a homeowner, the first three options are viable to avoid empty home tax. With some cost-effective and smart planning, you can easily sell or rent out your residential space and avoid empty home tax.
5 Ways to prevent property vacancy and avoid empty home tax
Here are five ways to attract high-value tenants to avoid empty homes and subsequent taxes.
Enlist your tenant criteria
Some residential areas are great for family tenants, while some areas can be bachelor magnets. Before renting out a property, clearly define the type of tenant you want within your property. This can make the rental journey easier for both the owner and the tenant.
You can narrow your search and the interested tenants and easily find your listing since your advertisement copy will be precise.
Ensure to give precise answers to questions on smoking areas, pet allowance, minimum income or credit requirements, house rules etc. Having documented proof of what is allowed and not allowed within the property can prevent legal complications in the future.
Professional photography can never disappoint you
The first thing tenants look at in a listing advertisement is the photographs of the property. A professional listing is never complete without great images. It enhances visual interest and helps close the deal faster.
According to the Wall Street Journal, listing with images can extend the viewership time to 20 seconds from a mere 2 seconds in a no-image listing. So if you have an art deco interior, expensive patio, functional backyard and well-lit bedrooms, don’t shy away from displaying it in the listing.
Don’t skimp on regular maintenance
Regular and timely maintenance to maintain your property’s aesthetic appeal and functionality is a great way to attract quality tenants. Generally, tenants love a property when there is less fixing, cleaning or initial setting up requirement.
A well-furnished and highly maintained property assures tenants that the property is in the hands of a good owner, and they won’t be required to make significant investments during the rental period.
Moreover, pre-emptive maintenance can prove to be economical and time-saving by minimizing the risk of things getting damaged in the long term. In case of unintentional damage, ensure a quick response time to maintain a healthy tenant relationship.
Renovate your home
Renovating is one of the most practical ways to attract high-quality tenants and increase your home’s market value. With smart and efficient home renovation, you can enjoy an excellent return on investment. It is recommended that you talk to a financial expert to plan a budget for your home renovation.
Upgradations and remodelling can broaden the appeal of your home for a more desirable and higher-income market. Updation can include renovating your kitchen, adding modern lighting fixtures, increasing the storage space, upgrading the existing appliances, improving the landscaping, etc.
A clean and modern look will instantly motivate tenants not just to rent your property but be comfortable paying an even premium rate.
Streamline your communication channel
Quality tenants will always have an inclination for property managers with excellent communication skills. Therefore investing in professional property managers is essential for finding great tenants.
Ensure that you leverage every line of communication, and it’s always easily reachable to answer any query. Often due to personal and work-related commitments, it is not possible to entertain tenant queries at any random hour during the day. Having a property manager can prove to be extremely beneficial in such cases.
With clear and precise communication, you can fully understand the tenant persona, their requirements, expectations and if they are a good match for your rental property.
Conclusion
Wondering how to get finances for renovating your home and hiring efficient property management services? A home equity loan is one of the easiest and quickest ways to secure financial support for innovating your home, finding quality tenants and ultimately avoiding empty home taxes.