Homebuyers getting 'nasty shock' from city's new vacant unit tax

Some Ottawa homebuyers are facing a surprising addition to their property tax bills, months after closing the deal. The shock comes from the introduction of a vacant unit tax (VUT) levied on properties left empty by the previous owner.

Nick Gagnon, who purchased a Nepean home in an estate sale, found himself staring at a $4,800 addition to his bill after the deal closed in February. "We got a nasty shock of, hey, here's this vacant unit tax we weren't expecting to pay," Gagnon expressed.

Rolando Pirker, another homeowner, opened his property tax bill to find it doubled from what he had estimated, with a $3,670 vacant unit tax charge on a home he bought in March.

Both buyers suspect errors made by the previous owners in their tax declarations to the city. However, according to Joseph Muhuni, the city's deputy treasurer, once a property is sold, any outstanding taxes become the buyer's responsibility.

Shannon Hogan, a real estate lawyer, noted that the VUT declaration deadline might go unnoticed in some cases, especially for purchases made early in the year.

The VUT is part of the city's efforts to address the housing shortage by encouraging property owners to return empty homes to the market. However, the implementation has led to confusion and unexpected financial burdens for some buyers.

Gagnon's lawyer is working to resolve the issue, potentially through an appeal or with the help of title insurance. Pirker's situation is also being addressed through legal channels, with his lawyer contacting the seller's lawyer, who then communicated with the city to rectify the error.

The experience has left both Gagnon and Pirker feeling uneasy, unsure about the implications and whether the issue will be fully resolved without further complications.

While the VUT aims to address housing issues, its unexpected application has highlighted the need for clearer communication and diligence in real estate transactions to prevent such surprises for homebuyers.