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Vancouver plans to tax empty properties 1% of their assessed value (bloomberg.com)
544 points by huangc10 on Nov 10, 2016 | hide | past | web | favorite | 585 comments



Intelectual Property (especially patents and copyrights) should also be taxed at 1% of their assessed/declared value. And a single infringer should never be liable for more than the assessed value.

Not because patents are empty, but because this would create the incentive for patent owners to assess a real value to them, and not "bajillion dollars", which they do now.


Intellectual property shouldn't exist because it grants a monopoly on ideas which is a violation of property rights. It's an unnatural monopoly.


Whether IP should exist or not is an age old debate, at least on the Internet. I don't think anything new can be contributed at this point.


Even just a small, yearly flat tax on copyrights, patents, and trademarks would be enough to discourage many people and companies from holding on to useless IP.

A lot of old books or music still under copyright will never generate another penny of income, but putting them in the public domain could let them be mixed or used as a foundation for new creative works.


Great, let's put old authors into bankruptcy just because their publisher decided their work needed to be archived.

This idea is absurd. Classic copyright term limits, and patents being reserved for only specific implementations of an idea would fix these problems without taxing the hell out of everyone.

You do realize everything you write is copyrighted? This means you're going to have to file with the IRS for all your Hacker News comments on an annual basis.


You're creating a false dichotomy. No plausible copyright reform requires filing notices for every forum comment or line of code.

Lines of code : Form a corporation, non profit entity or business, then pay a yearly copyright fee and transfer all code written to the business. The cost is proportional to the value of the copyright; if it's a small or unprofitable business the fee could be waived.

HN comments : the copyright is worthless anyway, people repost content all the time. To my knowledge no one has ever been sued over it.

Books and other publications : The publishers will pay for the copyright fee. Writers could be automatically covered for a grace period before publication with no fee, say one year.

These are all hypothetical,the point is you are immediately going to an extreme without considering what actual, plausible reform would entail.


> You do realize everything you write is copyrighted?

Which...is something else that can and probably should change. What purpose does this serve?


If you have to ask you have no idea how important copyright law is.

Do you really want to live in a world where someone, anyone, can take something you've done and give it away to other people without your permission, or commercialize it and leave you with zero recourse?

Most people think copyright protection is for important, significant creative works like a book or a song, but it's equally important for less visible things. For example: A single method in your code that someone else appropriates.

If you had to register copyright for every line of code you wrote, you'd never get anything done.


I'm not talking about getting rid of copyright. Of course I want copyright protection for my work, and of course I want other people to enjoy that protection as well.

I don't see any reason, however, that I need that protection for every single thing that I create. What purpose does _automatic_ copyright serve?

I stick a copyright notice in every software project already, but when I don't want the copyright I also have to explicitly disavow it. Why shouldn't the model be flipped to claiming copyright with a simple attached notice, instead of disavowing it?


You stick a copyright notice on things so people know who to contact if they need to license it. That clarifies ownership, it does not establish it.

> I don't see any reason, however, that I need that protection for every single thing that I create.

This is the social network problem. When the network starts to co-opt copyrights, demanding they're able to license the work you submit to them for any purpose, for any reason, without compensation, people understand that's a form of property theft and fight back.

The problem with "intellectual property" is it comes in forms both inconsequential and profound, and in the middle is a very, very grey area. There's been flippant comments on Reddit that have turned into screenplays. There's been stuff posted on Instagram and Pinterest that turned into a line of merchandise. These things have a way of growing in importance when you're not even looking.

Like code, where a quick throw-away hack might actually turn out to be a big breakthrough and gain popularity. This is why we have license like GPL, MIT, and CC that describe how your work can be used.

You're talking about a pre 1970 world where copyrights had to be registered, and honestly, that sucks. Can you imagine having to get each and every revision of your code officially copyrighted? What about someone stealing your idea you write about on Medium, or ripping your content wholesale and publishing a book. It's not stealing if it's not copyrighted, but thankfully it is. Automatically.


Arguably, they already do tax IP(for patents) by maintence fees.

https://en.wikipedia.org/wiki/Maintenance_fee_(patent) https://www.uspto.gov/learning-and-resources/fees-and-paymen...

The problem with liability being < assessed values is then what's the incentive to work for a licensing deal? Why pay for a license when, worst case, you'll be taken to court to pay the same amount?


> Why pay for a license when, worst case, you'll be taken to court to pay the same amount?

First of all: I'm not a lawyer and this is not legal advice.

You don't pay the full price of the intellectual property when licencing it, do you? The value of the intellectual property should be based on it's market value which would, in a perfect world be based on the expected benefit from that property. Also, paying for the damages for unlicensed usage does not mean you can keep using it unlicensed further on.


> The problem with liability being < assessed values is then what's the incentive to work for a licensing deal?

Wut ? “assessed value” ≠ “licence fee” ! The value of Windows for Microsoft is not the same thing that the value of one licence of Windows for your company ...

The proposed mecanism would just prevent Intellectual Vulture & co to gather a lot of worthless patents and then claim millions un court for patent infrigment.


First, maintenance fees are very low compared to legal action, and independent of whether the patent is worth $10 or $10B (or you believe it does). So is is entirely unlike a property tax.

> The problem with liability being < assessed values is then what's the incentive to work for a licensing deal?

If you upload a song you like, and tax has been paid for it as worth $100,000 that year, (which would be $1000/year), and you can license it for $1, then - yes, you have an incentive to license it for $1, because you are otherwise liable for as much as $100,000 (but not more[0]).

Think this is stupid? Because under the current law, you are liable for $150,000. That's what the law says, anyway.

[0] Except for e.g. willful infringement laws, which would make you pay 3x as much potentially - another answer to your "what's the incentive".


Out of print copyrighted books which are not published as ebooks should be a very good analogue to empty homes. Tax them at 1% of the average money they make they sell books' IPs to another publisher.


This really seems like a great idea!

Anyone see any reason why it shouldn't be?


Because creating an acurate valuation for IP at the time IP is created that would be accurate for the life of the IP is impossible. Moreover, it would make no sense for that made up valuation for tax purposes to determine future potential damages in IP infringement cases.

Edit: to bring the concept to perspective, imagine having to assign a valuation to new borns so in the instance they die as a result of negligence the damages are capped at the assigned valuation of the deceased at their birth.


I didn't explicitly state this here (I did numerous times before when discussing this) but property tax is annual, and I propose value assignment be annual as well. Therefore, if at the end of the year neither yourself nor anyone else had made any money from your IP, just assign zero.

At the moment, patents are cheap compared to the value they have as an offensive weapon, and this is what I hope to address with my proposal.

As for copyrights - the same framework would make infinite extension unaffordable even for Disney, so I hope we would all benefit.


>Therefore, if at the end of the year neither yourself nor anyone else had made any money from your IP, just assign zero.

If you can declare $0 and not pay taxes on the IP you are basically coming full circle to existing taxation based on the income generated by the IP. However, the more important issue with your proposal is an IP holder might not want to declare $0, despite no current revenue, because your proposal would then tie that $0 valuation to potential damages in the instance of an infringement case.

>As for copyrights - the same framework would make infinite extension unaffordable even for Disney, so I hope we would all benefit.

As both a small business owner and consumer I have always been on the other side of the Disney argument. Why do you think we would all benefit from Disney losing IP protections? Most of the time its a innovation argument, but is their really any innovation being stifled by the Mouse?

As a business owner, if my company creates some form of IP, say a cartoon mouse whom I copyright/trademark to various degrees (name, logo, color(s), etc...),the company invests capital to create a movie starring the mouse and the market votes with their wallets, which the company pays taxes on, and like Steve Jobs I am fanatical about Quality Control and just keep reinvesting in the IP, creating products with the Mouse that the market love and keep paying taxes. Why, at some arbitrary point in time, should my company lose IP protections to the cartoon Mouse and all completed works with the Mouse? As a consumer, I currently know Disney for its high quality productions and there is a lot of goodwill with the brand that has been established over a lifetime, now with the floodgates opened and everyone able to profit off Disney IP there will be confusion in the marketplace leading toward loss of goodwill with the brand.


> Why do you think we would all benefit from Disney losing IP protections?

Copyright is willingly extended by the public to private interests for the purpose of fostering innovation and creativity.

The question isn't how do we benefit by Disney losing IP protections, the question is how do we benefit by maintaining what we have graciously given them? What return on investment, if you will, is the public getting for Mickey not being in the public domain?


> However, the more important issue with your proposal is an IP holder might not want to declare $0, despite no current revenue, because your proposal would then tie that $0 valuation to potential damages in the instance of an infringement case.

For that year (alone), and I proposed you set it when you pay your taxes - that is, at the end of the year, in retrospect. In this case, there is never a reason for you to file anything other than $0 unless someone else is making money of it (if you are, then you're already being taxed on it).

> Why do you think we would all benefit from Disney losing IP protections? Most of the time its a innovation argument, but is their really any innovation being stifled by the Mouse?

It's supposed to be the other way around. We have granted Disney limited monopoly in return for wide availability. "Steamboat Willy" was released with the understanding that it will become public domain within 50 years. The question is, why on earth did we retroactively give another 100 years of that monopoly for free?

And even if it wasn't retroactive - the current 100+ years doesn't seem reasonable to me at all.

> Why, at some arbitrary point in time, should my company lose IP protections to the cartoon Mouse and all completed works with the Mouse?

The only reason they currently have these protections is that they bought them from Congress.

Why do you, as an employer, stop paying your employees a couple of months after you fire them / they quit? IP is not the same as work-for-hire, but it doesn't deserve the eternal protection it currently has. I am not aware of anyone who did NOT publish in 1930 because "I only get 50 years of copyright protection".

And ... you are arguing a strawman. I did not argue that IP should be abolished. Just introduce an economic cost to the unlimited monopoly, which is currently free.


IP protection covers three things—patent, copyright, and trademark. Patent and copyright exist to encourage people to innovate; there's less incentive for the studio to produce next summer's big action flick if it were legal to copy it as soon as it's released; and there's less incentive to figure out which of many nearly identical, but subtly different contraptions actually work if someone can then take the working one and produce a thousand at some factory.

Trademark is different. That rewards not the act of creation, but the ongoing investment in a brand. Do I want a huge quantity of something for above average quality and below average price? Buy Kirkland Signature. Do I want outdoor gear that will be covered no matter what happens? LLBean has me covered.

Disney almost surely makes almost no profit off of Steamboat Willy as a film, and in fact according to the copyright laws of the time, it wouldn't be covered today, so Walt probably didn't factor in the 21st century when amortizing his costs. Is there some teenager out there who could create some truly inspiring film by remashing clips from Steamboat Willy? I have no idea, but would love to find out. But a Mickey Mouse mug is more about trademark, and Disney should get to profit off that as long as people want to buy them. And if the teenagers film hurts the trademark, then that's something that could be resolved without an indefinite extension of copyright terms.


You can only determine the exact IP revenue when someone is paying explicitly for the use of that IP. If, however, I'm selling, say, a very complex machine, where I hold a patent over a small component of that machine, how would you determine the value of my patent?

> Therefore, if at the end of the year neither yourself nor anyone else had made any money from your IP, just assign zero

How would that solve the issue of patents being used as a offensive weapon? Under your proposal if a patent troll has thousands of patents and has made zero revenue on them, they would pay zero tax. On the other hand if they made money, they will happily pay the tax.


> where I hold a patent over a small component of that machine, how would you determine the value of my patent?

I want YOU to value that patent (and the tax just make sure it is not arbitrarily high). When you sue for damages, you must have that estimate. I just want to force that to happen in a way that discourages over estimation.

> How would that solve the issue of patents being used as a offensive weapon? Under your proposal if a patent troll has thousands of patents and has made zero revenue on them, they would pay zero tax. On the other hand if they made money, they will happily pay the tax.

Court cases take years to start (and resolve). The patent troll's leverage is "if you don't license, I'll sue". If they have to pay $10,000 for every $1M patent, they will not be able to afford their current business model - they will not be able to sue for more than they paid taxes for. (The lawsuit is likely - and perhaps should legally be required - to be filed only after tax is paid).


I think what he is getting at is if the patent owner ascribes no value to the patents for tax purposes, then the same lack of value applies if they attempt to collect damages for IP infringement.

This would force the patent troll to set the value to something balances so that they can afford the taxes while still recouping enough infringement damages.


Values are placed on people's lives all the time for insurance. I'm thinking for IP a flat tax may make most sense. It would incentivize letting go of at least some things. If it's $5 fewer things will go public than if it's $1000, for instance. It should probably be more to actually affect companies.


It would favour large institutional "inventors" and lock out individuals.

An invention and subsequent patent is only the beginning of a pretty risky endeavour. There are significant risks in bringing a new product to market, such as in funding, timing, marketing, industrial production, and so on.

Overall they will average out. Some patents will be more successful than expected, and some will bomb. Large companies will be able to make a guess, pay the tax, and overall they'll make a profit. The risk on a higher value and paying the tax isn't such a big deal for them.

Small time inventors will be unable to take the risk and be forced to undervalue their own invention lest it bomb. They'll be exploited by large companies that will just pay the limited damages and then exploit their invention.

All this would do is cap the return of small inventors, without affecting the carpet-bombing large companies.

I hate patent trolls as much as the next HNer, but I don't think this idea will work, sorry.

I'm a small time inventor with one patent filed, but I didn't pay the maintenance fees (I had to publish but didn't want to spend thousands more making it final) because it didn't make enough money so it's now in the public domain. A large company could take my work. If they make a success of it where I failed, good on them. But I'll be owed nothing (rather than a proportion), which I think would be unfair since they'd be using my work. I'm already a victim of having been unable to spread the risk in a way that large companies can do.


There is no point in getting a patent if you cannot enforce it. The current situation already favors large patent owners, and my proposal will not make that worse, I believe.

> All this would do is cap the return of small inventors, without affecting the carpet-bombing large companies.

On the contrary. IBM and MS have tens to hundreds of thousands of patents. Keeping them all "Ready to sue" would cost them billions. And .. a small inventor who can't afford $100K in court fees does not have patent protection even if they have a patent.

> If they make a success of it where I failed, good on them. But I'll be owed nothing (rather than a proportion), which I think would be unfair since they'd be using my work. I'm already a victim of having been unable to spread the risk in a way that large companies can do.

So ... if you had paid $0, then a company made money of it, increase the value that year to $1M (pay the $10K tax) and have them license or sue them. You're better off under my proposed system.


So, capping damages at the listed value of the patent basically means that you have a standing offer to sell a perpetual non-exclusive license to any one for any reason. This means that for anything truly valuable (say, medicine), the value would probably have to be assessed in the several billions. Medicine can take tens of years to commercialise, so we've just raised the cost of developing new medicine substantially.

So, rather, it would probably discourage patenting these things (in favour of keeping them deeply confidential) until their value has actually been proven, which goes against the purpose of the patent system in the first place, to encourage the disclosure of inventions in exchange for a monopoly on exploiting it.


> So, capping damages at the listed value of the patent basically means that you have a standing offer to sell a perpetual non-exclusive license to any one for any reason.

Yes. At full value PER ONE YEAR. (Property taxes are per year, and the liability limit I propose is "per infringer per year" (or "per infringement per year" if infringement is defined in a macroscopic enough sense).


Patents and trademarks maybe, but copyright? You have copyright on basically anything you create. Should I pay taxes on everything I put on github? On essays I write? What if I'm a famous artist? If I make some artwork to go in my living room, should I really pay 1% of the assessed value of that every year? If I write a book, is it not enough to pay taxes on the income I get by selling my book? Should I really have to pay taxes on it to keep it out of the public domain?


> If I write a book, is it not enough to pay taxes on the income I get by selling my book?

If I rent out a house, is it not enough to pay taxes on the income I get from rent ?

> Should I really have to pay taxes on it to keep it out of the public domain?

Yes. If you build a house with your own two hands, should you not pay property tax on it ?


A house takes up physical space. Intellectual property doesn't.

The reason we have property taxes is because maintaining the environment around the house costs money. There's no roads and sewers and schools for books.


there are a lot of costs involved with enforcing property rights. It's not sewers but it is legal departments, customs offices and law enforcement officers.

Also, a patent takes space by disallowing me to use the same kind of invention (even if I came up with it independently). And a copyright sometimes stops me from being able to use a "cultural common". They most definitely take space. And real estate property taxes are often supplemented by "road maintenance levies". They don't directly support the property's infrastructure when you really look into it.


Patents are a fairly large investment, plus they're a fixed life-span item. Although I'm largely against patents, fiddling with the fees associated with them won't help solve any problems.

Now when it comes to copyright enforcement, 99.99% of the copyrighted material out there is never formally published. It's source code, it's email, it's creative works produced and shared but never curated or packaged. How can you possibly tax all of that?


If it's not published, its protection comes mostly from not being seen (in private setting) or from trade secrets and associated laws.

If only want to use the tax as a way to make sure orphaned works can be shared, and patent trolls become unprofitable. I believe that an IP tax can help both. I think it is essential to force proper valuation of IP, and I think tying it to recovery (upside) and taxes (downside) is likely to give a proper evaluation.

It is not my intention to try to tax your own painting on your living room. I assume, by default, anything not listed, is valued at $0 for that year.

Do you understand that, regardless for copyrights or patents, your IP is not enforceable unless you can afford the court action?


I was going to mention that the enforcement cost is largely borne by the copyright holder, so there's a built-in tax there, but don't forget mechanisms like the DMCA provisions are cheap and can be applied with a heavy hand.

There's a solution to orphaned works: Reduce copyright to something like 25-50 years (plus life of creator?) and allow for one renewal, which requires a filing fee, for another 25-50 years. That's it. Suddenly all these orphaned works are liberated because it's not worth it for people to file.

Taxing based on valuation is absolutely, monstrously ridiculous. Many people write short fiction they publish online. Are you going to suggest they need to get an appraisal on their book, and then pay taxes on it? How many millions of people are going to review this and ensure that everything's tallied up correctly.

Orphaned works are a problem, but taxing them is not a solution.


> Are you going to suggest they need to get an appraisal on their book, and then pay taxes on it?

I keep repeating (and you keep ignoring) that I want no such thing, except when they expect damages for copyright infringement.

Taxing based on valuation is what is effectively done for every kind of property. If IP is property, there is no reason it should be exempt. And if it isn't property, it's about time we stop treating it as such.


It was suggested elsewhere that you would assess the value yourself, so if the only utility of your work is to hang it in your living room, you could claim it has $0 copyright value, and thus pay no tax.

The implication is that if someone decides to copy it, your claim for damages in court is based on that $0. But if your intent is to keep a private copy in your living room without the willingness to share with the public who gave you the privilege of copyright in the first place, perhaps that still remains fair.


Thanks! I feel a little less smart now which is a good sign. :-)


Who said anything about copywright?


> Intelectual Property (especially patents and copyrights)


Copyright is a form of IP.


Valuation of IP is not easy. Even if you invest a lot of effort, there will be some big error bars.


That is the whole point. Either you agree that IP is real property and as such it should be taxed, or you don't and and you pay no taxes.

If your property has value, then you should pay property tax. If it has no value, you cannot claim damages if someone 'steals' said property since it wasn't worth anything. You can't have your cake and eat it. If you start taxing imaginary property, this will force IP owners to consider wether their IP has actual value or not and act accordingly.


Of course. But they will still be about a hundred times smaller than they are today.

Today, someone thinks of an idea, patents it and estimates its worth at $100M. Someone else develops the same idea and assigns a value of $20K. That's the error bar TODAY.

Inventor has no incentive for realistic estimate - they will always overestimate (no penalty for that). An infringer has no incentive for a realistic estimate (no additional penalty for that if he loses in court).

An ip tax will decrease the error bars by forcing the patent owner to pay for overestimates.


Because it would make the misappropriation of the work of poor creators cheap.


In practice, a poor creator already has no recourse - enforcement is by court action, and courts are expensive. If you can't borrow 1% of the value against the asset to pay the tax, it's not worth what you think it is. Declare the value $1 for this year, pay 1 cent.

If you break through - then you'll have proof of value, be able to pay the tax, and sue/recover accordingly.


But if they had something worth keeping, they could ideally get financing from someone who'd want to own it. At least, that's what should happen in an efficient market.


A poor person will have to sell his idea or else he wont be able to patent it. What was proposed may solve some problems, but if it deepens that inequality hole I dont think its worth it.

If you own a unused property, in comparison, shows you have significant funds


A poor person already has to sell it. Patents cost a minimum of $5,000, usually not less than $20,000 and often not less than $50,000 all things accounted for. That's just filing - it can take upwards of 5 years to get approved or rejected. And then, it is STILL worth nothing because you have to sue to enforce infringement, at costs north of $100,000 more often than not.

I propose that the value of IP for tax purposes is owner assigned. If you have no money to pay the tax, just declare $1. The catch is, that would make you ineligible to recover much more than that in the case of infringement.

As far as poor people, it changes little to none. But it grounds patent valuation, which are now arbitrary.


There are a few fundamental flaws with your proposal, but namely the inventor of a patent or holder of IP generally does not just randomly assign a value to their IP and win that amount in the instance of infringement. It's sort of the whole point of proving damages, because it would be impossible to calculate future damages for a violation of IP at the time the IP was created.

For example I invent and patent the widget and assign a $1B valuation to the invention. Apple violated my patent, manufactures the widget and sells $100M. Should I sue, my potential damages have nothing to do with the $1B valuation I made up but with the damages I suffered as a result of Apple violating my patent.

Alternatively I write a book and slap $1 valuation, because I assume there is no market for my writing or to avoid the big tax until I make it big. JK Rowling Violated my copyright and slaps her name on my book and sells millions of copies, again my damages have zero relation to the valuation I created for the IP.


Property taxes are a yearly thing. I did not explicitly state that, but my suggestion (which I have made numerous times both on HN and on Reddit) is that every year one can assign a different value, which addresses the majority of your complaint.

The other part, about damages, is a grey area today. It is up to the jury/judge to decide how much value to assign to the infringement, but they start from arbitrary statements - which is why Oracle can claim 9 lines are worth $5B even though they've been giving them away for free for a long time.


" And a single infringer should never be liable for more than the assessed value."

This is the case already.

And no - there is no reason to tax IP at 1% of it's valuation.

Remember that patents eventually run out, in which case they are 'taxed at 100%'. :)


Why is there a reason to tax real estate property at 1% of its valuation per year? Same arguments apply, in addition to the one I gave (grounding valuations) which you dismiss without explanation.

> Remember that patents eventually run out, in which case they are 'taxed at 100%'. :)

First of all, so what if they run out? Other kinds of property also depreciate and we still tax them.

Second, copyright has effectively ceased to run out around 1970. So there is every reason to tax IP.


"Why is there a reason to tax real estate property at 1% of its valuation per year? "

Because there is an acute supply problem in Vancouver real estate. Making them pay 1% for empty homes incents people to rent them out.

The same arguments do not apply at all to IP.

"First of all, so what if they run out? Other kinds of property also depreciate and we still tax them."

'Depreciation' and 'expiration of patents' are not the same thing at all.

A 'patent' is the exclusive right to own a piece of IP for a period of time, after which it's public domain. It's basically pointless to add on a 'wealth tax' to a patent - there is already a tax on royalties and that makes sense.

When you buy your property, it does not become 'public domain' after 10 years - it's a completely different economic vehicle.

"Second, copyright has effectively ceased to run out around 1970. So there is every reason to tax IP."

Copyright and patents are totally different things.

Someone who created a unique song, has the right to protect it for quite some time. Moreover - it was 'made famous' by them, i.e. it's a brand that is invested in.

Disney should be able to 'own' Mickey Mouse forever - they created it, and they back it. They spend billions supporting 'Mickey' and there's no reason someone else should be able to rip them off by selling clones. In much the same way fashion brands are protected.

Drugs, algorithms, other kinds of solutions, there is definitely a 'public good' in those things being public after some time, so it's fair that IP protections run out.


In New York you pay 1% property tax/year (effectively), and it is quite universal. I think vancouver's 1% on empty is an addition to any property taxes. I was referring to the prevalent 1% tax on property which is applied to cars, places with unlimited apartments etc.

Disney should be able to own Mickey trademarks for as long as they maintain them - but they shouldn't be able to tell me not to copy or remix Steamboat Willy. They got 50 years of monopoly on it they were promised when they released it. It should be public domain now.


Are you that blind to the obvious?

People don't live in intellectual property. They live in homes.

There's a crisis of affordable housing in Vancouver. There is not a crisis of affordable intellectual property.


There are property taxes everywhere, not just in Vancouver. This is what I was referring to.

And actually, there IS a crisis of intellectual property. It is not a question of affordability, but rather of frivolousness, overreach and submarining. A tax is likely to solve some aspects of that.


The tax solves nothing, just as Vancouver's tax won't actually address the problem. It'll just generate more tax revenue.

Intellectual property is such a vast, ethereal concept that even pinning it down is damned near impossible.

That picture your kid drew that's on your fridge, do you pay tax on that? What if you put it on Instagram? What if your picture goes viral? What if it's co-opted by Wal-Mart and put on a bag, so you file a cease and desist? What if you make your own merchandise? There's such a slippery scale here that to tax everything, unilaterally, is absurd, and pinning down when something is impractical.


Are you purposely ignoring the discussion? There was no one, especially not me, talking about taxing the picture your kid drew. You're arguing a strawman.


How do you assess the value?


Shameless plug, for my just-released "fake home occupancy as a service", where my family and I charge you only 0.5% of the property value to satisfy the government's occupancy requirements. Contact info in my profile.


Letting someone have possession of property (yes tenants have possession) like this can be a dangerous thing to do in some jurisdictions - they can quickly gain rights to live there and you lose the rights to evict (or increase the rent - which could be a problem if they are charging you to live there!). Far more likely is that people start renting the empty property out+ - which will increase the supply in the rental market and help the housing costs... I.e. the intended effect.

EDITED + (with proper tenancy agreements which usually provide some balance of power between owner and tenant)


You might be interested in Whoosh.ly, my JDAAS (joke detection as a service) start up.


How much do you charge for detecting self referential jokes that are rhetorical questions?


favorite'd into oblivion.


Part of me was disappointed to find NXDOMAIN.


BC lets you evict "if you or an immediate family member (parent, son or daughter of you or your spouse only) wants to move in"

http://www.tenantsbc.ca/evicting%20a%20tenant.htm


Same in Ontario. Tenants don't have rights. Basically, save your money and become a landlord.


"Same in Ontario. Tenants don't have rights. "

No, tenants have pretty strong rights in Ontario.

It's very difficult to evict someone who does not want to go.


Similar in Germany. It is called Eigenbedarfskündigung. And pretty much the only way to evict. And it can be challenged in court.


But that's the main difference to other countries. In Germany, it's the only way to get a tenant out (if they pay the rent). It's basically impossible to get a tenant out if you can't find a family member who wants to move in. It's a contract that can only be cancelled by one party (the tenant). Wouldn't call that no rights for the tenant. I can't think of other contracts that cannot ever be cancelled ordinarily by one party.

In most other countries the landlord has the right to cancel the agreement with certain notice.


In the UK the key is to make sure that the tenant is Assured Shorthold rather than Assured. Assured tenants can't be evicted (unless they don't pay rent or other similar reasons) and their rent can't be put up unless they agree to the increase. Assured shorthold puts the balance of power in favour of the landlord+. The default (since the late 1990's) is Assured Shorthold tenancy - but if someone tried to play silly legal games as joked about by the GP their tenant might accidentally become Assured.

I am not a solicitor. I am not your solicitor. If you need legal advice on any of these issues stop reading and find a solicitor.

+ (not as much as most people assume because most tenants don't know or enforce their rights - wrongly thinking that it would be difficult when in reality the landlord will usually fold after a couple of letters long before things go to court.)


> In the UK

Scotland and England have differing private landlord tenancy laws so it's worthwhile checking the fine details in this respect. Scotland has a similar agreement to the Assured Shorthold and Assured tenancy:

1. Short Assured Tenancy where [0]:

a) the tenant is entitled to remain in the property for at least six months provided they abide by the conditions of their lease. A landlord can only evict if there are reasonable grounds [1]

b) after the six months is up the landlord can then give notice to quit and the tenant has to leave [2]

In both cases these provide reasonable and fair conditions for both landlord and tenant.

[0]: http://scotland.shelter.org.uk/get_advice/advice_topics/rent...

[1]: http://scotland.shelter.org.uk/get_advice/advice_topics/evic...

[2]: http://scotland.shelter.org.uk/get_advice/advice_topics/evic...

2. Assured tenancies [3]

a) a tenant can more or less remain in the property for an unlimited period of time provided they aren't in breach of their tenancy agreement

b) the landlord has a much harder time evicting tenants unless there are "grounds" for eviction [4]

In this case the tenancy is skewed to be more favourable to the tenant and the landlord has to do a lot more work to secure an eviction [5[

[3]: http://scotland.shelter.org.uk/get_advice/advice_topics/rent...

[4]: http://scotland.shelter.org.uk/get_advice/advice_topics/evic...

[5]: http://scotland.shelter.org.uk/get_advice/advice_topics/evic...

In many cases now, most properties are let as Short Assured Tenancies. Anecdotally, my past three tenancy agreements have been Short Assured Tenancy agreements.

In Scotland:

Tenant deposits are no longer permitted to be held by landlords or agencies and should be deposited into one of three tenancy deposit schemes within 30 days of the beginning of the tenancy [6].

Landlords and agencies are no longer permitted to charge for additional "costs" such as credit checks and "administration fees" on top of a tenants deposit and first month's rent. In England this obnoxious behaviour is still a plague on tenants seeking to rent [7].

Most landlords are now required to register with the Landlord registration scheme run by the Scottish government [8]

[6]: http://scotland.shelter.org.uk/get_advice/advice_topics/payi... deposits schemes

[7]: http://scotland.shelter.org.uk/get_advice/advice_topics/find...

[8]: http://scotland.shelter.org.uk/get_advice/advice_topics/rent...


The Short Assured Tenancy doesn't sound that great though - you have no certainty about your living circumstances past six months.


Sure but you do get two months notice to quit which isn't too terrible. Most times you'll get a feel from the landlord whether they're serious about long term letting or whether this is a stopgap until they can sell their house for a better price. Most decent landlords are upfront about this in my experience.

If you want additional security you can always contract in for a longer minimum lease, for example twelve months. Alternatively hunt around for a property letting company who's long term business is just letting.

At the end of the day, nothing is permanent if the landlord stops paying their mortgage or other loan secured on the property you're renting.

There is also the social housing sector - Council Housing, Housing Association and Housing Co-op's. These can provide much longer term rentals, however they can be a bit harder to obtain due to lower monthly rents which can cause waiting lists. There tends to be less flexibility on property size and type, i.e. you'll get to rent what is deemed legally and healthwise necessary for your circumstances; for example if you're single don't expect to get a three bedroom home, those will be allocated to families.


> At the end of the day, nothing is permanent if the landlord stops paying their mortgage or other loan secured on the property you're renting.

In Germany, selling the house makes no nevermind to the tenants. Considering how many people rent here, it just makes sense to encourage long-term tenancies, they lead to better communities.


You expect to be able to stay in a rental arbitrarily long whenever you sign a rental agreement?


I would very much like that yet, like Germany's rental laws. That way, you don't develop a two tier class system of tenants with no security or attachment to their local community, and owners.


I wouldn't trust reneherse's service. My competing service, "actual home occupancy as a service", is bulletproof; we guarantee that we will occupy your house full time.


Competition is always welcome! We do however build solid relationships with the neighbors and enroll the kids in local schools to provide complete residency simulation. All for one low fee.


So you have someone pick up mail and make it look lived-in, but why would someone not just rent it out then?

Why pay for your service (assuming it's not tongue-in-cheek) when you can pay for a property manager (lets be generous and say 10%) and also get rental income to offset the investment?

Ultimately, that's why the city is doing this; Whether the property is rented or owner-occupied, there will be a consumer who is adding to the economy.

UK/London really has a problem with non-occupance - they should definitely follow suit.


Most investor owners really don't care for the yield. They want to hold for capital appreciation. And rentals are annoying, dealing with tennants. Stuff breaks.

Would you care if you purchased a $1m home cash to flip it in a few years for $1.4m?


That's the definition of a bubble - asset detached from fundamental value.


That's how a lot of investors make money:

1. Pick a hot up and coming city.

2. Buy 5 properties at $1m each.

3. Sell in 2-4 years for double the value, preferably paying no tax on the capital gain at all if you (somehow) can.

Rinse and repeat. It's what happened in London in 2008-2014, etc.

You just, as an investor, need to be aware it's a bubble.


How do you time it to avoid the eventual correction?


You don't get too greedy. Usually there's a reason why bubbles form (e.g. a housing shortage in SF and London, gentrification of a certain area in a certain city etc) and often there are secondary factors as well.

Having both a clear exit price and timeframe in mind when buying is probably a good way to do it. Even if a property bubble starts to collapse, there is usually still sufficient time to get out.


Rinse and repeat. It's what happened in London in 2008-2014, etc.

Yeah, that worked really well for me in 2004 – 2009.


Property is one of those things where people are irrational about purchasing, which is good if you want to make money. Some people don't even care about the price -- they want to buy in 201X, and buy a property they shall.

If you believe property to be (significantly) overvalued, then you should rent instead of buy. If you're at the end of a "boom", then it's not unreasonable to wait it out and see how prices progress. Low interest rates also tend to push residential prices higher, because people can pay off more principal monthly vs less if rates are higher. When buying property it's almost always better to buy when rates are high and refinance later than to buy when rates are low.

Buying high and selling low is also definitely a thing. That doesn't necessarily mean you can't find a good deal somewhere (you can), but it'll be much harder.

Tldr: Unlike what most people believe, property is not a "sure thing" investment.


In London, yeah.

Prices today 3 times what they were in 2004. Well above inflation.

Rest of the country, that doesn't attract the "need to hide my money from a foreign tax man" crowd, not so much.


Actually, it mostly not about yield or appreciation.

Its about having more money than you know what to do with.


This obviously depends on the investor, but yes, in many cases, knowing that your money will at least keep its value (or increase with inflation) is sufficient.


  assuming it's not tongue-in-cheek
It is.


> Ultimately, that's why the city is doing this; Whether the property is rented or owner-occupied, there will be a consumer who is adding to the economy.

No, the city is doing this to increase housing supply. We do in fact have a housing crisis in Vancouver, this isn't just political rhetoric. When I was looking for an apartment about a year and a half ago, it was impossible to find one on the open market. Every open house had dozens of people showing up. I was eventually able to get a place through a personal connection; 10000 more units on the market would have made the process a whole lot easier.


I hear that some residents of Monaco who love the low taxes there are maybe not there as many days as they should be out of a given year. I hear they use timers on the lights and so forth to make their home look continuously occupied.


It's really astounding how many people aren't getting the joke here.


This is far from the worst idea I've seen for a start up.


True, though this wouldn't be the worst startup that I've seen.


I thought so too until I realized, so many crazy ideas have been tried out, it's sometimes hard to separate comedy from reality.


There are light bulbs as a service, so anything is possible.


Reddit users, where the same joke was made (one of the top comments), got it.


I know a guy who charges to do house-sitting when people go away on holiday (usually for a month or two).

He's literally made reverse Airbnb.


This more or less already exists in the form of anti-squat rental. They rent out empty houses/buildings for very low rent. The only downsides is zero renter protection, you can be kicked out at any time.

This can be a very good option if you need temporary housing. My brother did this for half a year to save on rent while his new house was being built.


Believe it or not, this service already exists in Vancouver. Usually done by real estate agents for their overseas clients.


Making the house look like it is lived in is probably all the neighbors want in the first place.


The neighbors aren't the issue that's being addressed, it's the lack of housing supply for the locals.


Yet another HN-save-money-by-breaking-laws scheme.

The question is whether the house is a principal residence or an secondary residence/investment.

I mean, I guess you could base your business on helping people break laws, like selling dummys for getting commuters the passenger lane, but your customers are no less guilty than they already were.


I believe OP was suggesting that he would be paid to actually live in your property, I assume mostly as joke :)

That said, I wouldd pay you 0.5%/y to live in (ie rent out) your property -- that works out to 400/month on a 1M property


I suggest subscribing to the service mentioned above: whoosh.ly joke detection as a service app.


Every tax has its loophole.


Except the loophole is what they're incentivizing.

Just like personal taxes: Don't work, just inherit money and invest in blue-chips.


i.e. Renting 2.0.


A fair approach is the Swiss one. Every property is taxed as if it is rented out at market rates, no matter whether it is rented, owner-occupied, or vacant. On the other hand there are (almost) no taxes on the value of the property. This removes most distortions in the rental market.


That's a beautiful solution. Why is it so hard to get intelligent legislation like this passed in the USA?


Switzerland has much more of a sense of unity than the US, which is perpetually at war with itself.

It's also surprisingly egalitarian, or at least against conspicuous inequality; you can accumulate a fortune in a Swiss bank, but you can't build a mansion that annoys your neighbors.


Switzerland also has less population than New Jersey and it's less than twice as large.


Being in a smaller country seems great sometimes.


The original vision for the US had relatively powerful small states and a relatively less powerful federal government. There are a lot of reasons to think this is still a pretty good idea.


This would be great tax policy. Unfortunately the 'conventional wisdom' among the leadership caste in my country (Australia) is that this would be political suicide. Pretty much every Prime Minister for the last 15 years has repeated the same mantra like it's some sort of compulsive nervous twitch: 'we would never place a tax on the family home'. Bunch of jelly-backs.

One nit to pick: even with imputed rent, without a land rent tax the property market would continue to distort incentives and mis-allocate capital. Meaning we will continue to see 'investors' chasing capital gains instead of yields (the literal definition of 'speculating'), funded almost exclusively with bank debt. Unless our political leaders grow a spine (and, in many cases, a brain), we'll continue to lurch from one financial crisis to the next as a consequence...

The next one is shaping up to be epic. Like, "it's time for WWIII" epic...


For me, it doesn't seem logical to tax imputed rent but not any other capital good that saves you money from renting the equivalent good. If you own a car, why not tax the imputed income (net of purchase costs) from not having to rent a car?

If you own sports equipment, should you be taxed on the imputed income you could have gotten from renting it out?

If you're married ...


This is called https://en.wikipedia.org/wiki/Imputed_rent if anyone is curious to learn more.


That's not fair if rental availability is a positive externality, though Switzerland may not have the absentee investor problem that makes the difference matter there.


Rental availability is no more a positive externality than the availability of frozen spinach at the grocery store is.


How is market rate determined without one party feeling slighted?


They do fairly comprehensive land value + structure value assessments for property tax in many US states. Basically they collect data on every property like square footage of building, size of plot, age of structure, etc and do a regression based on comparables in the area where the real price is known. It's not perfect for every property, but is a fairly straightforward analysis. Individuals can challenge the model's output if it's too far off. The same method could easily be adjusted for rental rates.


In DC vacant homes are taxed at 5% assessed value and "blighted" homes at 10%. It's the city's main weapon against vacant properties. People complain that enforcement is uneven or that sneaky developers find loopholes, but it seems like a good program overall.


Wow, that's an incredibly high tax! I bet it works pretty well, I'd want to offload that property damned fast if I couldn't rent it.


I wonder how many people end up actually paying it, but at the very least it's got to make it inconvenient and risky to own vacant property.


I wonder how they picked the magic number of $10,000. (Edit: as mentioned below, the figure is actually 1% assessment.)

Vancouver real estate prices jumped 20% in 2015 -- a $200k gain on a $1M house. If pricing trends continue along that trajectory then Vancouver real estate still looks like a great investment even if you just eat the entire tax.

Still, I'm impressed by how quickly Vancouver is moving forward with these measures (going into effect Jan 1st!). They're sorely needed, and it's great that they don't have to sit in limbo for years before being enacted.


>I wonder how they picked the magic number of $10,000.

As per the article: They didn't, it's 1% of the property value. The title is misleading.


Thanks, I missed that. It's strangely written because it re-iterates the $10,000 figure in the first paragraph of the article, but then notes 1% in the second.


Agreed, perhaps the title is misleading, but keep in mind a lot (if not most) houses in Vancouver are greater than 1 million.


> Vancouver real estate prices jumped 20% in 2015

> If pricing trends continue along that trajectory

It will not. That is a bubble.


Since they've gone ahead with the 15% foreign buyers tax, things have started to tank.


Volume has tanked. Prices are unclear. Everybody's waiting to see what happened.

My intuition, as well as pretty much everybody else's, is that prices will fall, when things start moving again. But it's far from certain yet, because that hasn't happened yet.

http://www.theglobeandmail.com/real-estate/the-market/vancou...


Price seems pretty clear to have tanked. Just look at the actual statistics package from the Vancouver real estate board[0]. The last page of that pdf shows a massive drop of about $300000 for the average price of a SFH.

[0]http://www.rebgv.org/sites/default/files/9.%20REBGV%20Stats%...


I have no idea how to read the tables in there, so maybe they cover this, but:

Too much information is lost, in the "average selling price" statistic that graph is using, to be able to use it to definitively claim anything like "an equivalent house is selling for less than it would have before".

For example, that graph could just as well be caused by fewer high-end houses being sold, but the houses that are being sold going for the same amount they would have before.

Again, I think it's very likely bordering on totally inevitable that prices will drop, and that that graph is probably showing that. But it's not enough information by itself to make that claim.


Agreed, but it's the same tables they're using to say the price is going up, with the same flaws.


For now. Once buyers gain confidence in the market again, it is likely to return to the way it was.


But you get rental income and don't get docked 10k if you just rent it out.

That's the goal with this tax.

The earlier tax by the province is to discourage investors.


It's 1 percent of the assessed home value, not a fixed fee. Bad headline...


While I think it is a step in the good direction, I am skeptical as to how successful this measure will be.

The problem at stake is that Chinese buyers are not buying property in Vancouver for speculative investment purposes only.

They see these properties as safe stores of value in order to diversify their risk profile in case the situation in Mainland China or their own financial situation goes down the gutter,

and / or to support their future potential effort to gain Canadian residency / citizenship for themselves or their kids,

and / or to vacation outside of mainland china once in a while.

Sure, this tax will hurt some of them, but the number of Mainland Chinese people with the means to write off such an amount as the cost of security is massive.

Source: lived in Mainland China for a few years, worked for this specific demographic.


If they're not just in it for short-term speculation, then they can rent the house out and hire someone to manage it. Make some more profit while contributing to the Vancouver economy and rental market.


This would go against the ideas of being able to go to Vancouver on a whim, and finding things as they were left, or being able to jump on a plane in case of Mainland China Meltdown and directly move into their house/flat. Those apartments are not meant to be rented, they are safe places.

Contributing to the Vancouver economy and rental market? This demographic could not care less, this does not factor in their decisions.

(I have only empirical evidence of this mindset, but I would be willing to expand on what I base my reasoning on.)


They are going to try and tie in AirBnB regulation with this as well (sort of). Since places wouldn't be considered occupied when you have 20 of them renting them out as full time AirBNBs.

To get around it you will need a business license for each unit, which is also taxed. Business license #'s must be displayed on the temporary rentals website under the listing. Business licenses can only be obtained with permission from your strata. They think they can free up another 2000+ rentals this way as well.

AirBNB is running an insane ad campaign here that mostly pisses off every Vancouverite I know in my echo chamber of EVERYONE UNDER 35.

I work at one of the big Universities here. It is crazy biking in the summer through affluent ghost neighborhoods. Lots of the older big houses that were tore down were rentals to like 6-8 students at a time, or had basement suites. Now they are empty boxy white McMansions.


Many people complaining that "1% is nothing to Chinese millionaires" are missing the point. These people didn't get rich by throwing their money away. Yes, they can easily afford an extra $10k or $20k or even more a year, but this combined with the recent 15% tax makes Vancouver a lot less attractive. After that last tax, foreign investors are already getting spooked and starting to flood Toronto's housing market instead - this too will have an effect. It's a great start, and I hope to see it in Toronto and other cities as well.


This is a good observation, and supported by even a casual glance at international macro over the past 35 years. "Hot money" flows very quickly in countries with deregulated captial markets.


Wouldn't be sad if that was implemented in NZ - same problems here of ridiculous price rises = land banking. Seeing empty (million dollar +) houses around you is surreal and totally against community spirit we're so widely known for. Good move Vancouver !


I really really really hope that Winston Peters polls well with this as a policy so John Key will appropriate it.


I grew up in Vancouver and I think this law is necessary (maybe). The big question here is...how do they tell if the house is unoccupied or if the owner is on an extended vacation? Can it really be enforced?


Well with a gov't power monopoly, they can do things like check power and water utility usage. You can also look at tax return address records for the BC income tax part. Driver license / BCID / immigration records are another. You can also do a 'prove you have a resident in X months or be assessed fines' like many HOAs and mortgage agreements do for various things.

Policies over large numbers aren't about %100 enforcement, a general behavior modification is considered a success usually.


They do this in Monaco as well. I read in an article a while back that some nonresidents have automated timers to turn on/off the lights, turn on the heating, water, etc.


I think that's mostly for tax avoidance purposes. So they can claim they were in Monaco for tax purposes - Avoiding taxes in their home country.


Tax evasion, actually. But yes. Was just implying that checking (or data mining) might not always lead to positives when you're dealing with cunning individuals.


I was going to say this. These rules will drive investment in home automation. I'm also willing to bet that a large portion of the revenue generated from this scheme will be spent on the manpower necessary to enforce it.

That being said I'm happy to be proven wrong, but can we expect any sort of data to support a hypothesis? I'm not sure as I'm unfamiliar with Canada's policies on access to public data.


Home automation won't help in this case, though I suspect there will be some level of falsified leases. It seems that if it's a privately owned residence, it falls into one of two categories: Principal residence or not principal residence. If it's a principal residence, there are likely other documents that would also utilize that address (voter registration, healthcare, drivers license, taxes, insurance). If it's not a principal residence, is it leased out for at least 6 months a year on leases of at least 30 days? If yes you're fine, if no you're fined.

There may be some question with privacy (e.g. proof of leases/lessee), corporate-owned residences, etc. but I'm sure they've factored that into things. The big deterrent to lying about it is probably the magnitude of the penalty for doing that - it's kind of like Martha Stewart: she didn't do time for insider trading, she did time for lying to the FBI (about insider trading).


The proposed fines for trying to defraud the system are much higher than paying the 1%/year tax. It's like parking: pay $5 to park for an hour, or take a 1 in 5 risk of a $100 fine. Most people pay for parking.

EDIT: and the goal isn't to make revenue, it's to free up rental stock. If all the money collected goes towards enforcing the system and 20,000 vacant units end up in the rental market, then the policy is a total success.


> I'm also willing to bet that a large portion of the revenue generated from this scheme will be spent on the manpower necessary to enforce it.

Yep. You can see that with wealth taxes. Most countries that have wealth taxes (e.g. France) make close to nothing from them, because it's inefficient to verify and collect all the data to properly levy the tax, and you need a lot of civil servants for that.


The goal in this case isn't to make money but to have more apartments/houses for rent (and hopefully lower the prices too)


Or maybe, just maybe, some homeowners will be incentivised to actually rent the house out to someone who needs it.


> they can do things like check power and water utility usage

About 5% of Melbourne's housing stock was recently found to be unoccupied, using water usage data. It was closer to 19% for investment properties.

http://www.abc.net.au/news/2016-04-18/call-for-vacancy-tax-o...


Agreed, and it's likely more about sending signals to the investor class. And make noises like they're doing something about not being able to afford to live here. The government doesn't want prices to crash, because then homeowners would be screaming. But they do want to let the air out of the balloon a bit.


It's not a criminal trial. The burden of proof is low and the onus is on the homeowner, not the city. So if the city decides your property is vacant, you can go ahead and prove you were there, or you pay up.


That's going to go well.

"Why didn't you use any power?!?!" "I have solar"

"Can you give an alibi!?!?" "I was home alone"

"Not good enough, pay up!"


So cynical...give it 6 months


> Can it really be enforced?

Yes, it can be enforced.

For example, in the US. Housing associations have staff that run around in cars taking photos of literally everything. Grass too long - Fine. Bins out outside of trash date - Fine.

This happens daily. I know because I used to live at an HOA.

My point being, hire individuals with cars to keep track of houses. Have photos of non-residency and then impose heavy fine to recoup costs.


Easier surely to use existing data such as number of letters delivered, electric bill, water bill, voter turnout, etc.. Amalgamate that and send a person to the property. Requiring property maintenance companies to register the properties they work on, eg "for health and safety reporting", might be useful too.


That doesn't seem feasible for an entire city at all.


If you are thinking about having someone driving around to photograph everything frequently, yes. But a couple of cars outfitted like the Google Street View cars, each given a section of the city to drive every other month or so is very feasible. You could also put cameras on any public transit vehicles to keep photos coming in from vehicles that are already being operated by city funds.


It wouldn't be a daily thing. Maybe once every other year at most. The cost would be minimal to the government to hire a few contractors for a one-day thing.


Sort of like how the Consumer Price Index gets calculated, then.


Why not? If you are looking at least 10k/house in taxes, it's very efficient to have a full time staff to check out the recently flipped (well...) MLG houses.


Just have a neighbour reporting line (/email/site). If you're really having trouble finding places, add a finder's fee of 10% of the fine.


They ask politely, and you either lie or tell the truth.

This is a big difference between the west and a country like the PRC where strong rule of law isn't a given. In the west, they will simply ask, with the caveat that perjury is a serious crime if you are found out. In China, they will figure out another way since trust isn't assumed and lying is considered a much weaker offense. Completely different systems.

(The PRC is trying to go in a trust direction with income self reporting, but it doesn't affect the taxes you pay, oddly enough.)


Here is a better description:

http://www.calgaryherald.com/vancouver+slaps+year+empty+home...

(Vancouver slaps $10,000 a year tax on empty homes. Lie about it and it’s $10,000 a day)


I think Vancouverites are going to be phoning in to report their neighbors.


I think there is a similar issue in Geneva.


They can't - this is all for show.


Why post with such confidence when you're not informed?


When you're throwing two million dollars at a house, sight-unseen, that you then let stand empty for years, how difficult would it be to hire a housekeeper to come around the place every week, and make it look lived-in?


They could have a whistle blower reward. Someone is going to find out. Say 20% of the fine goes to the person that reported it.


    > When you're throwing two million dollars at a house,
    > sight-unseen, that you then let stand empty for years,
... you're not breaking a sweat paying the $20k.

It sucks, you'd rather keep your $20k, of course. But it's not worth risking cheating it...


Having someone keep the house clean and presentable is in itself a laudable goal.


you might as well actually rent it out at that point..


That means tenancy contracts, risk of damage, and a whole raft of legal obligations.


If you're an absentee building owner, you don't (can't, really) worry about any of those things yourself. Instead, you lease your building to a property management agency, who handles all of that for you.


Well being a tax cheat also introduces a whole raft of legal obligations...


I mean, as compared to the cost of making it look lived-in, or just stopping by so as to technically "be occupying it". Rents in Vancouver are at a very low ratio to the cash value of property, as bad as 70:1 (value:annual rent.) In the normal world, it's more usually 20:1. This means that the costs and risks of renting a property in Vancouver are often considered not worth it.


So they will find someone to show up every week or two and turn on lights on, add some furniture, moving things around etc. I feel like the city of Vancouver is going to always lose the free market game of cat and mouse.


No, I'm pretty sure you have to either declare it as a principal residence or you have to rent it out for at least 6 months a year with leases of at least 30 days. Enforcement isn't based on whether the lights are on or not.

And I'd assume that if you're declaring it as your principal residence but you're registered elsewhere for little things like voting it may trigger investigation that could get Very Expensive if you are determined to be lying.


"No, I'm pretty sure you have to either declare it as a principal residence or you have to rent it out for at least 6 months a year with leases of at least 30 days. "

I don't understand - what if it's neither ?

What if you are a plain old canadian who has a home in Vancouver and (for instance) a home in Golden ?

It's not at all unreasonable to have a home that:

a) is not your primary residence

b) you live in for 2-3 months of the year

c) you have no intention of renting out because you go there regularly or sporadically

What does one do in that circumstance ?


Pay the tax. Owning a home in a crowded city, not living in it the vast majority of the time, and refusing to rent it out to people who desperately want to live there imposes a negative externality on the city, which you need to pay for.


"Owning a home in a crowded city, not living in it the vast majority of the time, and refusing to rent it out to people who desperately want to live there imposes a negative externality on the city"

It is proposed that doing so imposes a negative externality.

That proposal is not without counterpoints, however.

Specifically: that the owners of those homes not only pay their full property taxes already, but they impose fewer costs on the infrastructure of the city while not being present. They don't drive on the roads or walk on the trails or use the public restrooms, etc.

Look, I proposed a hypothetical situation[1] that has nothing at all to do with Chinese speculators buying up housing assets in a safe haven market. I proposed an unintended consequence on an otherwise innocent, well meaning actor. It's very interesting to note that the response is, basically, "too bad for them".

[1] I don't live in Canada.


My parents are in this very position, having bought a condo in Vancouver to live in part time. Their principle residence is in a small town in the BC interior. They're pretty upset about the tax, and it's not hard to see why.

They could declare the condo their principle residence, but then they would encounter complications regarding their vehicles, which are typically not used in the city. (They prefer transit, and trucks don't fit into condo parking spots well)

They aren't participating in property speculation and have owned the condo for around 5 years now.

So, I think they are a good example of innocent, well meaning actors who are being unfairly taxed by a law that is well-intentioned but not quite properly formulated.


I'm suspicious of statement [1] given that you know where Golden is and why people would want to live there. ;)

I think you're right there is probably isn't a loonie cost to the city that can be recouped with this vacancy tax. But I also think your counter-point is moot. Vancouver isn't trying to keep revenues up, it's trying to encourage a certain behaviour, namely more housing and rentals on the market.

While I do think this vacancy tax is a good idea that could help out affordability in Vancouver, I agree with you that it's far from the best that Vancouver could do and is really only addressing the symptoms rather than the cause.


"I'm suspicious of statement [1] given that you know where Golden is and why people would want to live there. ;)"

I'm a skier :)


No, sell the house quickly before prices go down too much. Rent a house for the 3 months you stay there. It's going to be cheaper than the tax and you cash in some money.

Or AB&B the house all the time you're not there. Would that count as renting?


If you own two homes, you're definitely pretty rich, pay your taxes.


He already pays taxes.


You know, you're right. I payed sales tax on my last Amazon purchase, so I don't think I'll be paying my income tax this year. Why pay twice?


Are you sure you've paid enough taxes on your purchase? May be you need to pay twice, or triple because a) you don't really need this thing b) there are people that need it more than you c) you've bought it online d) you're privileged white male in IT.


I'll be sure to donate my assorted set of DIP IC sockets to the next homeless person I see. They definitely need it more than me.

> you're privileged white male in IT

You got me there.


Go ahead.


Why? With two parents one child inherits both of their family houses. This is especially true in low natality countries. The heir will not necessarily be rich and with a high salary job.


If you inherited anything, you're pretty rich. Pay your taxes, people are living on the street.


So sell or rent out one of the houses. Having a large non-income generating asset that you don't make full use of is a luxury the non-rich can't afford.


Sometimes at least one of the houses is in some rural area nobody wants to move to so there is basically no market for them. Common in the mountains.

Real case: the parents family houses are in the mountains, parents moved to city, children (adult now) live in another city. They'll eventually inherit the 3 houses and they won't use them. The city house can be sold or rented. The other ones, not a chance. If taxes on them would be too high (they aren't now) they could rather destroy those two houses. I don't think this is what we want.

There is always the way out of renouncing the heredity. Then you still get an empty house that nobody wants and nobody maintains.


There's always going to be workarounds. The question is whether the workarounds are worth the cost. I'm sure some people will do that. Others will consider it better to have a friend or family move in (which is desirable).


This is a solved problem. For example, reside in NY state for more than half the year and they'll figure it out and send you a bill for owed income taxes. It will then be your burden to prove that you were not in the state, not theirs to prove you were.


Indeed. Reminds me of "rat-catchers" in Europe during the Plague, where some people ended up raising rats to turn in for a bounty.

It's interesting how people circumvent incentive-laws.


Still makes them spend money which will get spread into the local economy. Might not be as much as the 10k, but it will still be something. Hopefully enough to offset any potential gains investors think they'll make by holding onto the property.


The way you do this is to go to a property management agency and rent it out, which is the city's desired behaviour.


Why would they do that instead of renting it out?

The overhead wasn't 0 before, it was the opportunity cost of not renting out the house. Now the opportunity cost has increased significantly.


All we have to do is raise the cost/difficulty beyond that of having a tenant. This is a step in the right direction.


You seem displeased.

At least Vancouver is trending in a positive direction.


I expect to see a thriving "rental" market. How is a poor home owner expected to know that the person they rented their house to wasn't actually living there?


Can you clarify this? Are you saying that homeowners will create fake "rental" contracts with straw man renters, and then when fined, provide the rental contract as evidence that they tried to comply? My guess is that the city will simply take the position that the onus is on the homeowner to ensure the renter is actually there, which is the correct approach if the concern is that homeowners would create straw man renters.


Yes, I'm talking about straw man renters. Considering that the non-compliance penalty would likely end up being several times the value of the property (1% per day, and you can bet that it will take more than a few months before self-declarations are challenged), I suspect that this bylaw would get thrown out or heavily rewritten by the courts.


I'd also guess the city could ask for proof of money being exchanged, and test the rent against neighbouring homes' rents.


They could provide a copy of the contract when asked, I presume


That's the point of the "rental" market. It's still real. But maybe I'm happy to rent 2-3 houses for a very low price? I have business in different parts of the city over a week, so that seems like a convenient arrangement. (wink, wink)


But how do I know you won't actually live there full time causing me wear and tear costs. I mean ... you now have a contract that says you can!


You don't hand over the key.


Pretty sure that any locksmith will make you a key to a house you have a copy of the lease for.


That should be fine. They have to declare the rental income as income, and if it's a pure rental property, pay GST as well. Tax authorities already audit for unusually low rental rates vs market. The rent on a 1m house is likely in the 50k+ range, and the taxes on that will exceed the 10k no-occupancy fee. Problem solved.


When I was living there in 2014, I made a guess that 1/3 of Coal Harbor appartments were unoccupied or unsold by counting dark windows.

My guesstimates were not far from what the city hall counted in 2015.

B.T.W. I'm no longer living in Vancouver


Ya if you stand at Georgia and Denman on a clear evening, say 9 PM, 3/4 of the West End will have lights on, and 1/4 of Coal Harbour will. It's a ghost town.


Is a flat rate fine a good idea in this case?

I imagine an investor keeping his or her $30M mansion just as a hedge against RMB depreciation and keeping it empty will think nothing of the $10,000 fine.


it's 1% of the previous year's assessed value. $10,000 was an example

http://vancouver.ca/news-calendar/vancouver-introduces-empty...


The headline assumes a $1m house. From the article:

> The empty-home tax will take effect by Jan. 1 and will be calculated at 1 percent of the property’s assessed value.


Why could you not make the charge for non-payment be something like 50% of the assessed value or repossession of the property. Why do you have to leave an easy route out.


Why don't they just build more? Flood the market with supply and see how the price goes.


A fair question, but it assumes that they aren't already doing this. There is already a great deal of new supply creation and there has been for decades. Vancouver has nimby tendencies just like any other city, but it's not SF. There is lots of new condo construction.

The problem with a supply only solution is that supply takes time to create, and there are limits to the rate of supply creation (ie. how many trades are available). Even if city government really made a push to increase the pace of supply, they only be able to move the needle slightly, and it'll take years for that supply to appear. If the speculative demand is overwhelming it might not have a noticeable affect. I would say this has been the case for the last several years where Vancouver housing starts climbed to the highest it has ever been and yet prices climbed ever higher.

If you want to solve the problem quickly, you need to not only increase supply, but also have a look at curbing speculative demand.


I understand some cities have exuberant property values, for various reasons. Is it that great of a city? I've never been, but what makes Vancouver special to see such high value increases?


Canada's housing bubble hasn't yet popped, and prices are high in many places.

Vancouver itself is attractive to investors because it has a very mild climate, is close to Seattle and the rest of the U.S. West Coast is a short flight, and it's much closer to Asia than the rest of Canada is.

It's also a very beautiful place with lots of amenities for those living there rather than overseas investors or occasional business travelers.


It's one of the nicest/only cities in the Pacific Rim, where Chinese investors seem to prefer to invest.


I grew up there and have since moved away but what I loved about it was just how calm, peaceful, and beautiful it was. I think I wouldn't want my kids to grow up anywhere else (if I can jump back in time to Vancouver in the mid 90s).

Vancouver also welcomed multiculturalism which helped a lot.

The city has since moved on (like all cities with time and technology) but I think many people still want that feeling of what it was like in the 90s. It was just a extremely nice place to start a family.


I want to clarify that the $10,000 is not a fixed value. It is simply the 1% assessed value of the house. However, most houses in Vancouver are greater than 1 million.


This is an incentive to demolish a home in order to drive the assessment down (and keep ownership of the valuable land). Right?


>Lie about it? That’ll be C$10,000 a day in fines.

Ouch!

I think you should have to live in your home at least six months of the year (sounds weird!) that would also appease snowbirds.

If the owner can't be there for six months of the year then require the owner to rent or lease it.


Interestingly, something similar is already enforced for Alaskan oil tax credits: you have to live in Alaska at least six months of the year to receive them. One could probably look to their enforcement system.


I'm really surprised that this was implemented into law. I remember suggesting it on twitter without hearing anyone say it before a couple of years ago. But I'm guessing what happened is other places might have similar laws.


Is their an exception if you're trying to sell your house?


I would hope not. The whole idea is to lower prices, what better way to lower prices than to tax you for holding out for more money?


They really need to crack down on black money flooding into the Canadian economy. This seems like a quick way to assuage the criticism without addressing the core issue.


One way to crack down is making it less attractive to bring in such money which this seems precisely tailored to do.


This is starting to happen already. China has started launching lawsuits in Canada to seize real estate purchased with questionable money:

  http://www.reuters.com/article/canada-china-court-idUSL1N19K03D


Governments don't usually crack down directly on money flooding into their economy.


In the rural US, it's reasonably common to bulldoze unused agricultural buildings like silos and barns (and old houses on the property) to reduce the property value and thus property taxes.

It's also somewhat common to fine owners of unused urban houses because they attract "transients" and cause other assorted problems.


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