In a move to tackle the issue of derelict properties, the City of Edmonton has announced a prorated tax forgiveness program aimed at incentivizing property owners to rehabilitate or redevelop neglected homes. This initiative is part of a broader strategy that includes the introduction of a new tax subclass, which imposes a property tax rate nearly three times higher than the normal rate on derelict properties in mature neighbourhoods.
The policy takes effect immediately, allowing property owners who have cleaned up their properties in 2024 to apply for reimbursement of the additional taxes paid this year. Derelict property owners will receive more information about the application process for tax forgiveness with their tax notices. Assessments are currently being reviewed in preparation for 2025.
Prorated Tax Forgiveness Program
Property owners who undertake efforts to clean up their derelict properties during the year can apply for a refund for the portion of the year their property was in compliance with minimum standards. Under this prorated tax forgiveness system, owners will initially pay taxes at the higher derelict rate; however, they will subsequently receive a refund corresponding to the period their property was improved. This approach serves as an added incentive for property owners to act swiftly and decisively in addressing their property’s condition.
If a property is rehabilitated, the owner pays the higher tax rate for the first part of the year before the rehabilitation, and reverts to the general residential tax rate for the remaining part of the year. This flexible system encourages property owners to engage in remediation or demolition efforts rather than allowing their properties to remain derelict.
The New Derelict Residential Tax Subclass
Effective in 2024, the City of Edmonton implemented a derelict residential subclass, which allows the City to charge a higher tax rate to owners of properties that are assessed as derelict. The subclass targets residential properties in mature neighbourhoods that exhibit severe neglect, significant disrepair, or are uninhabitable.
By imposing higher property taxes on these derelict properties, the city aimed to encourage owners to either bring their properties up to code or pursue redevelopment options. The initiative not only seeks to enhance the aesthetic and safety of Edmonton’s neighbourhoods but also aims to mitigate the financial burdens placed on city resources due to the costs associated with managing neglected properties.
Between 2017 and 2020, the city incurred substantial costs—amounting to $1.3 million—related to bylaw inspections, enforcement actions, and safety and welfare checks on 31 derelict homes. In light of this financial strain, the city hopes that the new tax subclass, along with the tax forgiveness program, will significantly reduce these expenses by promoting the timely remediation of problem properties.
Early, Positive Results from the Derelict Subclass Program
Early indications suggest that the measures implemented under the derelict subclass have begun to yield positive outcomes. As of this year, over 200 properties have been classified as derelict, with at least 23 of those properties having been demolished already. The city has reported that this initiative not only enhances neighbourhood safety by reducing the risk of fire and clearing hazardous waste but also improves the overall quality of life for residents.
The Edmonton City Council is expected to provide a more comprehensive report in early 2025, detailing the effectiveness of the subclass and its impact on community standards and financial implications.
REALTORS® Association of Edmonton (RAE) Support
The RAE has expressed support for the new prorated tax forgiveness policy as an incentive for property owners to expedite the cleanup of derelict properties and as a complement to the previously established derelict residential tax subclass.
