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Thread: Property tax rebates for vacant buildings

  1. #1
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    Property tax rebates for vacant buildings

    I am just learning about property tax rebates for vacant commercial and industrial buildings in Ontario. It seems its under Provincial legislation. 30% rebate for commercial and 35% for industrial doled out by the municipalities.

    Is this typical in other provinces, states? Why does this make sense? It seems counter productive when trying to keep business districts active. I would tend to think that there would almost be a penalty for keeping a vacant storefront!

  2. #2
    Cyburbian Random Traffic Guy's avatar
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    I haven't heard of it, but seems to be a good idea for me. Give the owner a little slack for money for marketing and fixing up the place.

    The owner is still penalized by having no income while paying the mortgage and the rest of the property taxes. Even if the property doesn't have a loan on it (can't say "free and clear" anymore since the owner still has to pay rent to the government, a.k.a. property taxes), there is still the opportunity cost of having nothing, which the shareholders or the like would be most concerned with.

  3. #3
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    But there are no strings attached requiring to fix up the place. The situation is found often where series of storefronts are left vacant, for whatever reason, for years even. Where is the incentive for the owner to lease the space at whatever rate and have there be activity rather than a dead zone which grows to an even greater dead zone. It all seems counter to the term econ. dev.!

  4. #4
    Cyburbian The One's avatar
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    Well....

    How about requiring some evidence (receipts) of property maintenance or improvements and marketing of the site for use? 1:1 or 2:1 ratio to qualify for the full tax break? I assume you mean Canada? There may be some equal protection or tax limitations here in the USA that could hinder such an idea.....
    Skilled Adoxographer

  5. #5
    Quote Originally posted by fausto View post
    But there are no strings attached requiring to fix up the place. The situation is found often where series of storefronts are left vacant, for whatever reason, for years even. Where is the incentive for the owner to lease the space at whatever rate and have there be activity rather than a dead zone which grows to an even greater dead zone. It all seems counter to the term econ. dev.!
    Sounds familiar. I, personally, see no reason to rebate vacancy unless it was caused by a rehabilitation investment and of short duration. (Or at least a certain duration, depending on teh building.)

  6. #6
    Unfrozen Caveman Planner mendelman's avatar
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    It suppose this can make sense...depending on one's perspective.

    If a building is vacant, the property owner should get a rebate to help with marketing/improvement? I don't think so. If you are a property owner with the intent to rent properties for profit, then you should not get a tax break if you are doing a bad job of keeping the property occupied. Vacany is an essential risk in the property rental business.

    This smells of special interest lobbying to benefit people who already have money.

    This has got to be ripe for abuse.

    Btw, we don't have anything like this (to my knowledge) in Cook County, IL (Chicagoland).
    I'm sorry. Is my bias showing?

    Let's not be didactic in this profession, because that is a path to disillusion and irrelevancy.

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  7. #7
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    In Toronto, this contributes to a problem we have with some designated historical buildings. If the building is designated , the owner cannot tear down or make any significant changes to the structure. However, the owner is not forced to maintain the building, so some buildings are just left to rot. The fact that they save on property taxes by not renting out the building just adds greater incentive for them to leave it vacant.

    IMHO, taxes should be higher on vacant properties to encourage the owner to either find a lessee or sell the building.

  8. #8
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    Mendelman is right!

    This is special interest favouratism! ... if i were away and left my house vacant for 3 months or so , could i apply and get a rebate from my taxes?

    Who else in Ontario sees a flaw in this rebate program?

  9. #9
    Cyburbian Random Traffic Guy's avatar
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    Is the property more or less valuable when occupied? Seems it would be more valuable. Is the tax rebate just a quick reflection of the delayed appraisal?


    RTG, who is more anti-tax-theft than usual due to writing a big check to IRS today.

  10. #10
    Cyburbian DetroitPlanner's avatar
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    We have special districts in our town where those that invest in empty buildings and turn them into lofts get large rebates on property tax, though the City makes up for this with its 2.5 percent income tax (the folks moving into these areas typically have good paying jobs and lived in the burbs).

    I'd have to agree that there should be no special tax breaks for empty buildings and it is the owner's responsibility to get the building to be an income producing property. If it means creating deals with the City or getting the zoning changed, so be it, but it is in everyones best interest to see it be viable.
    We hope for better things; it will arise from the ashes - Fr Gabriel Richard 1805

  11. #11
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    ....any commercial corridor or business distrct situation... a shopkeeper can paste newspaper on the windows (90day minimum vacancy) then collect a cheque from the municipality!!....

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