January 12, 2023 ·
The Underused Housing Tax (UHT) is an annual 1% tax on the ownership of vacant or underused housing in Canada that took effect on January 1, 2022. The tax usually applies to non-resident, non-Canadian owners.
If you are an individual who is a Canadian citizen or permanent resident, you are excluded from the UHT. Excluded owners do not need to file a tax return.
Your ownership of a residential property may be exempt from the Underused Housing Tax for a calendar year depending 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
However, if you are not an excluded owner of a residential property on December 31st you still have to file a UHT return even if you qualify for an exemption.
The UHT return is reported on a calendar year basis due every April 30th regardless of your actual fiscal year end.
There are two ways to determine the value of a residential property. The general rule is to use its taxable value, however, if you want to use its fair market value instead, you must file an election with the Agency.
There are significant penalties if you fail to file an Underused Housing Tax return when it is due. Owners who are individuals are subject to a minimum penalty of $5,000. Owners that are corporations are subject to a minimum penalty of $10,000.
You must keep records to support the determination of your obligations and liabilities. Even if your ownership is exempt and you do not have to pay the tax, you must still keep records.
If you know you are affected by the UHT or have concerns that you might be, please contact you E.E.S. consultant for more information.