Underused Housing Tax

The Government of Canada implemented a one percent Underused Housing Tax (UHT) on the value of residential real estate owned by any non-resident, non-Canadian that is considered vacant or underused and will apply to residential properties owned on December 31, 2022.

Unless you are an excluded owner, every person that is an owner of a residential property located in Canada will be required to file an annual return with the Canada Revenue Agency (CRA). An excluded owner is, on December 31 of a calendar year, one of the following:

• An individual Canadian citizen or permanent resident of Canada

• A publicly traded Canadian corporation

• A person with title to property in their capacity of trustees of various widely held trusts

• A registered charity

• A cooperative housing corporation

• A municipal organizations or other public institutions and government bodies.

If you are an affected owner and the property is not exmpted, you will pay a one percent Underused Housing Tax (UHT) on that property for the year, based on the value of the property and the owner’s proportionate interest in the property. The property will be exempted based on:

• the type of owner you are

• the availability of the residential property

• the location and use of the residential property

• the occupant of the residential property

Please be aware that if you are an affected owner of a residential property in Canada on December 31, you still have to file an Underused Housing Tax return for the residential property for the calendar year, even if your ownership qualifies for an exemption and do not need to pay taxes.

The penalty for failing to file the tax return is equal to the greater of

1. $5,000 for individuals, or $10,000 if not an individual and

2. The amount that is the total of

   1. Five percent of the tax payable by the person in respect of the residential property for the calendar year and

   2. The product obtained when three percent of the tax owing is multiplied by the number of complete months from the due date of the required return that the balance remains outstanding

See more info: Underused Housing Tax - Canada.ca