There’s been a lot of conversation about the newly implemented vacancy tax in Canmore, and for good reason. 

Whether you’re a full-time resident, a second homeowner, or simply following local news, this tax is making waves throughout the Bow Valley. It’s a major shift in how the town approaches housing availability and affordability. While the intentions are good, the outcomes may be more complicated than they first appear.

April 28, 2025: Legal Ruling on the Vacancy Tax 

This week, Justice Christopher Simard of the Court of King’s Bench ruled the Town of Canmore can proceed with the vacancy tax. However, the tax will not be implemented for another year (starting in 2026). 

The ruling states that the declaration of a vacancy tax is within the “reasonable interpretation of the MGA (Municipal Government Act),” but there is one change, which is why the tax won’t start until 2026. 

As it was previously stated, Section 9 of the vacancy tax bylaw allows the Chief Administrative Officer (CAO) of Canmore to determine if a property doesn’t meet the bylaw’s criteria to be a primary residence sub-class for a year, the assessed person can be retroactively liable to pay taxes.

Justice Simard ruled this to be an “improper retrospective effect” for the 2025 tax year, and by pushing the start to 2026, it will not have an “unfair retrospective effect that offends the rule of law.”

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The Basics: What Is the Canmore Vacancy Tax?

Introduced in 2024, the Livability Tax Program is aimed at addressing Canmore’s ongoing housing crisis by encouraging better use of existing homes that sit empty for most of the year. It primarily targets second homeowners whose properties are not being used as full-time residences or aren’t part of the permitted short-term rental pool. 

This isn’t a new tax by any means. In 2022, the Government of Canada instituted the Underused Housing Tax (UHT), which is an annual federal 1% tax on vacant or underused homes. This primarily impacts foreign national owners, but it also had some impact on specific Canadian homeowners.

To be considered a primary residence, the owners or the renter must live in the property for a minimum of 183 days per year, with 60 of those days being continuous.

The idea is to free up more housing for local residents and long-term renters by disincentivizing homes that sit vacant. It’s part of the Town’s larger push advocating for housing affordability, community vitality, and sustainable growth.

The Process: How It Works

Every property owner must complete a Declaration of Use. 

Declarations can’t be submitted until December 31 each year, meaning many second homeowners are in a holding pattern, unsure of how their property will be categorized or taxed until year-end.

As it currently stands, the Town of Canmore will apply a tax of 0.40% of the property’s assessed value. Based on a median assessed value of $1.043 million, here’s how that might look:

• Primary Residence: $2,136
  
  
• Second Home under the Vacancy Tax: $6,308
  
  
• Tourist Home: $6,545

The Unintended Consequences

While the goal is to make housing more accessible for locals, the unintended consequences are already being felt:

• Uncertainty for second homeowners: Many of whom have long-standing ties to the community, contribute to the local economy, and spend significant time in Canmore throughout the year. They now face an unclear and potentially costly process without much clarity on how the tax will be applied.
• Limited housing impact: Even with this policy, we don’t expect a large number of homes to suddenly become available for local renters or buyers. Canmore’s inventory challenges are deeply rooted, and this is just one piece of a much larger puzzle.
• Potential legal challenges: Some believe this tax oversteps, especially when applied to non-permanent residents, and there’s already talk of legal action in the coming months.
  
  

What Should You Do if You Own Property in Canmore?

Stay informed. The best thing you can do right now is to keep an eye on official updates from the Town of Canmore and start preparing for your Declaration of Use at the end of the year. 

Make sure you understand how you’re using your property, whether it’s a primary residence, short-term rental, or second home used intermittently.

This is a developing topic, and I’ll continue to share updates as more information becomes available. I also recommend visiting Fair Future Canmore, which has great information about this tax and will share more about the court’s ruling mentioned above.

If you’re considering buying or selling in Canmore, or wondering how this new tax might affect your investment, let’s talk. I’m always happy to offer insight and guidance based on your unique situation.