Underused Housing Tax (UHT)
The UHT is a new tax applicable from the 2022 calendar year, imposed primarily on non-residents of Canada who own residential property that is considered to be “underused.” It is important to note though that Canadian individuals or entities may still be required to file a UHT return.
Please contact our office if you have any questions or believe that you may have to file a UHT return. We charge a flat fee to prepare the UHT return (each owner must file a separate return for each property). Any consultation on filing requirements or exemption eligibility would incur an additional charge.
Please see the sections below for more information.
What is the Underused Housing Tax (UHT)?
The UHT is imposed primarily on non-residents of Canada who own residential property that is considered to be “underused.”
Anyone that is required to file a return is considered to be an affected owner (defined and explained below).
Anyone who does not need to file a return is considered to be an excluded owner.
An affected owner (i.e. someone who is required to file a UHT return) may still be exempt from paying the UHT even though they have to file a return.
Who has to file a UHT Return?
Non-residents of Canada (i.e. anyone who is not a Canadian citizen or permanent resident) who own residential property as of December 31 of the calendar year must file Form UHT-2900 for that calendar year. These individuals or entities are considered to be affected owners.
Canadian citizens and permanent residents of Canada are not required to file Form UHT-2900 if they own the residential property in their own right (i.e. they own the property in their own name and for their own benefit). These individuals are considered to be excluded owners.
If the Canadian citizen or permanent resident owns the residential property through a different means of ownership, such as:
- As the shareholder of a corporation
- As a partner of a partnership
- As a trustee of a trust
Then there may be a requirement to file Form UHT-2900, particularly for the 2022 tax year. Even if a Canadian citizen or permanent resident needs to file a UHT return due to their ownership of the property through a corporation/partnership/trust, they may still be exempt from paying any tax.
Contact our office and one of our tax professionals can assist you in determining your filing requirements as it pertains to the Underused Housing Tax.
What is a "residential property" for purposes of the UHT?
A residential property is generally considered to be any of the following properties:
- A detached home with no more than 3 dwelling units
- A semi-detached home
- A rowhouse or townhouse unit
- A residential condominium unit (along with any common areas), unless the owner owns all (or substantially all) of the residential condominium units within the building
- Any other similar properties
Which properties do not require a UHT return?
Quadruplexes or larger multi-residential properties, apartment buildings, hotels, commercial buildings, mobile homes, trailers, and vacant land do not generally fall under this definition of “residential property” and ownership of these types of properties would not require a UHT return.
What is the deadline to file a UHT return?
Normally, the UHT return must be filed by April 30 of the following year.
The CRA has provided transitional relief for UHT returns pertaining to the 2022 calendar year, allowing these UHT returns to be filed by April 30, 2024 without incurring any penalties or interest.
I have to file a UHT return. What exemptions are available so that I don’t have to pay the tax?
If you are required to file a UHT return, you may be eligible for one of the following exemptions to eliminate any taxes owing:
- If you acquired the property during the calendar year
- If the property is seasonally inaccessible (e.g. public roads are not maintained during the winter) or if the property is not suitable for year-round use (e.g. home does not have a heating system)
- If the property is a vacation property located in an eligible vacation zone
- If the property was uninhabitable during part of the year due to a natural disaster or major renovation
- If the property is the rented for a total of at least 180 days in the calendar year under a qualifying occupancy (generally, short-term rentals do not qualify as a “qualifying occupancy”).
In addition, the following exemptions were available for the 2022 tax year:
- If the property is owned by a Specified Canadian Corporation
- If the property is owned by a Specified Canadian Partnership
- If the property is owned by a Specified Canadian Trust
I don’t qualify for any of the UHT exemptions. How is the tax calculated?
The UHT is calculated as 1% of the value of the property. The value of the property is the greater of:
- The property’s assessed value for that calendar year
- The property’s most recent sales price
What are the penalties for failing to file for the UHT?
An individual who is required to file a UHT return but does not file will be liable for a minimum penalty of $1,000 per property per year, while a corporation, trustee of a trust, or partner of a partnership that is required to file a UHT return but does not file will be liable for a minimum penalty of $2,000 per property per year.