The city of Ottawa's finance and economic development committee has approved a tax on homes that are vacant for at least half of the year.

The vacant unit tax has been in the works since last year, when council approved a framework for the fee. The plan is to impose a one per cent tax on vacant properties.

"Beginning in 2023, property owners assessed in the residential tax class will be required to declare annually if their property was vacant for over 184 days in the prior year (2022)," a report prepared for FEDCo said. The extra tax would come out to one per cent of the property's MPAC assessment value.

The move is meant to increase housing stock in the city, rather than be a revenue generator, but city staff say it could still bring in approximately $25 million over five years, which would go toward affordable housing.

Staff estimate 330,000 residential property owners would need to declare their vacancy status annually. The tax would be billed on the final property tax bill in May, with a due date in June.

The program must still be approved by city council before coming into effect.

"Once approved, staff will engage the Province to request that Ottawa be designated as a municipality in Ontario that can levy the Vacant Unit Tax. Once the required provincial designation is in place, staff will place the final by-law on Council's agenda for approval," the report states.

If approved, the first vacancy declaration period would open on Jan. 1, 2023, for the 2022 reference year. Residents who have not declared their vacancy status by the end of April will automatically be deemed vacant, and the tax will apply.

There will be several exceptions to ensure homes are not taxed unfairly. Principal among these is that the vacant unit tax does not apply to primary residences. Exemptions would also be available for owners in care, death of an owner, significant renovations, sale of the property, court order, and cottage rentals in rural areas.