December 20, 2017 6:07 pm

Law firm warns Vancouver buyers they could be on the hook for sellers’ empty homes taxes

WATCH: City of Vancouver passes empty home tax

A A

One of Canada’s top tax law firms is raising concerns Vancouver’s Empty Homes Tax could leave property buyers on the hook for sellers’ unpaid obligations.

Thorsteinssons LLP raised the issue in a blog post that outlines several scenarios in which an unwitting property buyer could later find themselves on the hook for the tax.

Story continues below

READ MORE: Paperwork rolls out for Vancouver’s empty homes tax

That’s because, it explains, the tax is attached to the property itself, not its owner.

The firm argues that if a property seller failed to file an Empty Homes Tax declaration before closing a sale, or if they did — but the city later disputed the paperwork — the tax would fall to the new property holder.

“It’s incumbent on the city to clarify this now with the Law Society,” said real estate consultat Michael Geller.

“Many lawyers who are involved in real estate transactions are quite concerned about this.”

WATCH: Part-time Vancouver resident says Empty Homes Tax is unfair

Thorsteinssons LLP does recommend one way for buyers to protect themselves, which is to demand that a seller file an Empty Homes Tax declaration as a condition of closing a sale.

However, it notes that that measure would not protect a buyer if the city came back and audited the declaration later. Under the tax, the city has two years to review the file.

READ MORE: Vancouver woman being charged Empty Homes Tax for land with no home on it

Geller said anyone who is buying property should involve a lawyer in the process to try and reduce their risk.

“I would caution anybody buying a property right now to make sure that their lawyer seeks declarations from the vendor that there are no taxes owing or penalties owing,” he said.

“And then hope that in the event that they are later found to be liable to pay taxes, that the city will not go after the new owner.”

READ MORE: From 2001 to 2016, over 12,000 more Vancouver homes were left ’empty’: city report

Vancouver’s Empty Homes Tax took effect in July, and the city began sending out declaration forms to an estimated 180,000 property owners this fall. Completed declarations are due Feb. 2.

The tax imposes a penalty of one per cent of a property’s assessed value to homes that are left vacant for more than six months of the year.

The city says it is needed to ease the Vancouver’s rental vacancy rate, which is hovering below one per cent.

© 2017 Global News, a division of Corus Entertainment Inc.

Report an error

Comments

Want to discuss? Please read our Commenting Policy first.