Vacant home tax?

Oakland, California has instituted a vacant property tax.

https://www.sfchronicle.com/business/networth/article/Oakland-s-vacant-property-tax-takes-effect-13563273.php

Oakland voters in November approved a tax that applies to any privately owned property in the city — including residential, commercial and empty lots — that is not “in use” for more than 50 days in a calendar year starting in 2019. The annual tax is $6,000 per parcel for most properties, regardless of size or value. The tax for condo or duplex units or ground-floor commercial space is $3,000 per year. There are 10 possible exemptions.
The tax will be added to annual property tax bills starting with the one that goes out next year. It will continue for 20 years. 

Oakland’s City Council put Measure W on the ballot, saying it would raise $10 million annually, which can only be used for homeless services, affordable housing, programs to fight blight and illegal dumping, administer the tax and defend any possible lawsuits. Measure W passed with 70 percent of the vote.

Now that it is law, it has become complicated.

The City Council could, by ordinance, restrict the tax to certain zones within the city, but has not done so. 

In December, the city’s Finance Department sent a letter to owners of 25,000 non-owner-occupied properties warning them about the tax should their property be deemed vacant. The letter set off alarm bells for some owners.

One issue is that undeveloped land, and not just unoccupied residences, are deemed vacant. So many people did not see that coming.

The measure exempts owners “who can demonstrate that exceptional specific circumstances prevent the use or development of the property.” But most owners won’t know if they qualify for this or any exemption until the Finance Department writes rules implementing the measure and the City Council adopts them. 

Building a home or apartment building on raw land is not easy or cheap, and some vacant lots are in areas prone to landslides and wildfires.

Even supporters of the tax qualify their support.

SPUR, a Bay Area urban planning think tank, said in its voter guide that it supports the idea of a vacant parcel tax, as a way “to help move vacant land into active use and eliminate blight,” but it opposed Measure W because it would be very difficult to implement fairly. “The definition of what constitutes vacancy is very broad,” it said, and “the exemptions are also very broadly defined,” such as a “demonstrable hardship that is not financial.” It also said a flat tax may disproportionately affect small property owners.

One objection to a vacant home tax is that people should be able to do what they want with their property as long as it does not create "negative externalities", that is, hurt other people. The counter-argument to this would be that vacant homes drive up the cost of housing and create homelessness.


One interesting fact is that putting property into an LLC can triple both the cost of insurance and the property tax. That is, both governments and businesses make a distinction between property that is both a home and an investment, on the one hand, and real estate that is purely an investment (and an investment in status in terms of having bragging rights about owning a second home in a glamorous area).