Vacancy Tax on Empty Units
Progressive tax on vacant residential properties. You don't get to sit on empty homes while people sleep on the street.
- Drafted
- Organizing
- Introduced
- Committee
- Enacted
The Problem
Thousands of housing units in Denver sit vacant - held by speculators waiting for prices to rise, by investors treating housing as a financial asset, or simply abandoned by negligent owners. Meanwhile, 7,500 people are homeless and thousands more are one rent increase away from displacement.
Empty homes in occupied neighborhoods attract crime, reduce property values for neighbors, and represent a moral obscenity in a city with a housing crisis.
What Denver Currently Does
Denver currently has no vacancy tax or penalty for empty residential properties. The rental market is tight - the U.S. Census Bureau’s American Community Survey put the Denver-Aurora-Lakewood rental vacancy rate at roughly 4.7% in 2024, down from the prior year - yet thousands of housing units still sit empty. The 2022 ACS estimated Denver’s overall residential vacancy at approximately 5-7% (on the order of 5,000-8,000 units). Some of these are in the normal “for sale” or “for rent” pipeline, but a significant number are held vacant for speculation or are simply abandoned. In a market this short on housing, every unit warehoused for speculation is one denied to a family that needs it.
Critical legal note: TABOR. Colorado’s Taxpayer Bill of Rights (Article X, Section 20 of the Colorado Constitution) requires voter approval for any new tax. A vacancy tax in Denver would need to go to voters as a ballot measure. This is not a barrier - it is a democratic process. Denver voters have repeatedly approved ballot measures for progressive causes (municipal broadband in 2018, Proposition 123 for housing in 2022). A vacancy tax with revenue dedicated to affordable housing is a strong ballot proposition.
Our Solution
Progressive Vacancy Tax
A tax on residential properties that remain vacant for more than 6 months in a calendar year, escalating over time:
| Year Vacant | Tax Rate (% of assessed value) |
|---|---|
| Year 1 | 1% |
| Year 2 | 2% |
| Year 3 | 3% |
| Year 4 | 4% |
| Year 5+ | 5% |
On a home assessed at $500,000:
- Year 1 vacant: $5,000 tax
- Year 3 vacant: $15,000 tax
- Year 5+ vacant: $25,000/year
This makes speculation increasingly expensive while giving owners reasonable time to renovate or sell.
Exemptions (narrow and specific):
- Active renovation with valid permits (12-month maximum)
- Owner in medical care or military deployment (documented)
- Property actively listed for sale at fair market value (6-month maximum)
- Estate in probate (12-month maximum)
No exemptions for:
- “Planning to renovate” without permits
- Holding for future development without timeline
- Corporate portfolio management
- Seasonal/vacation homes (if owner has no Denver primary residence)
Enforcement: Annual vacancy registration required. City inspectors verify vacancy via utility usage data (water, electric), physical inspection, and neighbor reports. Failure to register: automatic 5% rate.
Revenue: All vacancy tax revenue is dedicated to the Denver Affordable Housing Trust Fund, specifically for social housing acquisition and community land trusts.
Estimated revenue: $50-80M/year (based on estimated 5,000-8,000 vacant units and escalating rates)
International Evidence: Vacancy Taxes Work
| City/Country | Model | Result |
|---|---|---|
| Vancouver, Canada | 1% Empty Homes Tax (2017), increased to 3% (2021). | Vacancy rate dropped 25% in first year. Generated $170M+ CAD in cumulative revenue (2017-2023). Thousands of units returned to rental market. |
| Melbourne, Australia | 1% Vacant Residential Land Tax on properties vacant 6+ months. | Revenue dedicated to affordable housing. Vacant properties decreased measurably. |
| Paris, France | Taxe sur les logements vacants - progressive tax on homes vacant 1+ years. | Vacancies in Paris decreased. Revenue funds social housing construction. |
| UK (various councils) | Council tax surcharge of up to 300% on long-term empty properties. | Thousands of empty homes brought back into use. |
| Washington, DC | Vacant property tax at 5x the standard rate. | One of the highest vacancy tax rates in the US. Discourages speculation and land banking. |
Wherever it has been tried, it works: cities that tax vacant properties consistently see vacancies fall and units return to the market. A vacancy tax is one of the simplest, best-proven housing tools available.
How We Pay For It
This is a revenue generator, not a cost. Administration costs ($1-2M/year) are covered many times over by revenue generated.
Frequently Asked Questions
“What about property rights?” You have the right to own property. You do not have the right to hoard housing during a crisis. Cities tax property for schools, roads, and services. This is the same principle: your vacant property imposes costs on the community, and the community is entitled to compensation.
“Won’t owners just claim the property is occupied?” Utility data doesn’t lie. A unit using zero water and minimal electricity for 6 months is vacant. Combined with physical inspections and neighbor reporting, evasion is difficult and penalties for false reporting are severe.
“This will hurt people who are renovating.” The 12-month renovation exemption with valid permits covers legitimate renovations. If your “renovation” takes 3 years with no permits, it’s not a renovation - it’s speculation.
References
- City of Vancouver. (2023). Empty Homes Tax annual report. https://vancouver.ca/home-property-development/empty-homes-tax.aspx
- Colo. Const. art. X, § 20 (Taxpayer’s Bill of Rights).
- Colorado General Assembly. (2026). HB26-1036: Local taxes on vacant residential property. https://leg.colorado.gov/bills/hb26-1036
- U.S. Census Bureau. (2022). Selected housing characteristics [American Community Survey 1-year estimates, Denver County, CO]. https://data.census.gov
- U.S. Census Bureau. (2024). Selected housing characteristics: Rental vacancy rate [American Community Survey estimates, Denver-Aurora-Lakewood, CO metro area]. https://data.census.gov